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Tesla Model Y, a New S.U.V., Is Unveiled Amid Mounting Challenges

Tesla’s chief executive, Elon Musk, unveiled the Model Y on Thursday. “It has the functionality of an S.U.V., but it will ride like a sports car,” he said.Credit...Frederic J. Brown/Agence France-Presse — Getty Images

Tesla has unveiled a compact sport utility vehicle called the Model Y, in its latest effort to broaden its product range while contending with problems on a number of fronts.

Speaking on Thursday night at an event at the company’s design center in Hawthorne, Calif., Elon Musk, Tesla’s chief executive, touted the new electric vehicle’s performance and safety-focused design.

“It has the functionality of an S.U.V., but it will ride like a sports car,” Mr. Musk said. “This thing will be really tight in corners. And we expect it will be the safest midsize S.U.V. in the world by far.”

Tesla, however, is still a long way from delivering the vehicle. It forecast that the earliest deliveries would begin in fall 2020, barring engineering or production delays of the sort that hampered its best-selling car, the Model 3.

Last year, Mr. Musk predicted that the Model Y would be ready for delivery in the first half of 2020. Tesla has not offered detailed plans for assembling the car, and recently said it would probably make the Model Y at its giant battery plant in Nevada.

Toni Sacconaghi, an analyst at Sanford C. Bernstein & Company, said Tesla’s goal of having the Model Y in volume production by the end of next year was a matter of concern.

“This timeline appears similar to the original timeline for the Model 3 ramp, which was ultimately delayed by nine-12 months,” he wrote in a note to investors.

By late 2020, Tesla will probably face stronger competition. Audi, Mercedes-Benz, Jaguar and Porsche are just starting to produce vehicles that will rival the Model Y.

The first Model Y versions will have starting prices of $47,000 to $60,000 and are expected to offer a driving range of up to 300 miles. The company has begun taking deposits of $2,500 for orders.

A more affordable version with a range of about 230 miles and a starting price of $39,000 is supposed to go into production in spring 2021.

Tesla said it aimed to offer the Model Y in the United States, Canada, Mexico, China, Germany, the Netherlands and a number of other European countries.

Investors seemed unimpressed by the rollout. Tesla’s shares declined 5 percent on Friday.

Tesla is confronting sales challenges in Europe and China, markets it has been counting on for expansion. The company has also faced some operational uncertainty. Two weeks ago, Mr. Musk announced that Tesla would begin selling a long-awaited version of its Model 3 sedan priced at $35,000, $8,000 less than the cheapest current version. But he said Tesla would lose money in the first quarter, and analysts question whether Tesla can ever make money on the car at the lower price.

Tesla originally said customers would have to wait two to four weeks for delivery of the $35,000 Model 3. It now says the wait is six to eight weeks because of the volume of orders.

Sales of Tesla’s other models, the Model S luxury sedan and Model X sport utility vehicle, have been flattening. And analysts suspect that demand for Tesla vehicles has softened since the beginning of the year, when the federal tax credit available to Tesla customers fell by half, raising the total cost for buyers. Until the end of 2018, Tesla buyers were eligible for a credit of $7,500. That fell to $3,850 on Jan. 1, essentially raising the price of Tesla cars.

Tesla responded with a series of price cuts to lift sales. In a conference call in January, Mr. Musk said many customers could not afford the company’s cars.

To cut costs, Tesla announced that it would close most of its stores around the country. Days later, it backtracked and decided to keep many of the stores, and to reopen some that had already closed, though it affirmed a shift toward online-only sales. It also reversed direction on pricing, saying it would increase prices on all its cars except the $35,000 version of the Model 3.

A correction was made on 
March 15, 2019

An earlier version of this article referred incorrectly to the production plans for Tesla’s Model Y. The company said it would be available in North America, parts of Europe, and China; it did not say the car would be produced in all of those places.

How we handle corrections

A version of this article appears in print on  , Section B, Page 3 of the New York edition with the headline: Tesla Unveils New S.U.V. Despite Sales Challenges in Difficult Markets. Order Reprints | Today’s Paper | Subscribe

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