Ferrari goes electric with its most powerful street-legal car ever: the SF90 Stradale

Ferrari SF90 StradaleSource: FerrariFerrari just launched Its most powerful street-legal car ever — a 986 horsepower road bullet with three electric motors.
The SF90 Stradale marks Ferrari's first plug-in hybrid that's not built for the racetrack. It's powered by a 4.0-liter turbocharged V8 that generates 769 horsepower, but gets another 217 horsepower from three electric motors — one powering the rear wheels and two for the front.
VIDEO1:5201:52Ferrari reveals its most powerful road car everSquawk Box EuropeAll that extra juice helps the car do zero-to 62 mph in a mere 2.5 seconds and reach a top speed of 211 mph.
It's not exactly the first plug-in Ferrari, famed for its thunderous V12 internal-combustion engines. The $1.5 million La Ferrari supercar, only 500 of which were produced, used electric motors to give a little boost to its V12 and push it to 950 horsepower. Ferrari's Formula One racers also use a hybrid motor-generator system.
The “SF90 Stradale” name comes from the automaker's 2019 Formula One race car, the SF90 in honor of Ferrari's 90 years in racing. The word “stradale” means “road” in Italian.
Ferrari SF90 StradaleSource: FerrariIt's fast but don't count on driving too far in battery-only mode since the all-electric range is only 16 miles.
But Ferrari's engineers had to solve some complex problems by adding a hybrid system, which added an additional 595 pounds. Ferrari shaved off some of those pounds with carbon fiber but also came up with some clever innovations.
By using the hybrid system for reverse, Ferrari was able to take out the reverse gear from the eight-speed gearbox, which saves weight. It's also all-wheel drive, to better utilize the hybrid system. And the two front electric motors also control the torque, making driving at high speeds “much simpler and easier,” according to Ferrari.
Ferrari also had to work on new aerodynamics to create more downforce and efficiencies. So it lowered the engine cover and created new diffuser and front-end systems.
Ferrari SF90 StradaleSource: FerrariThe big question Ferrari has yet to answer is price. Ferrari dealers say it will be less than the La Ferrari but likely more than Ferrari's previous V8 mid-engine, the $350,000 488 GTB, which was recently replaced by the F8 Tributo.
Either way one thing is certain: the waiting list for the SF90 Stradale will be long. Deliveries are expected to start in the beginning of 2020.
Ferrari SF90 StradaleSource: Ferrari

Elon Musk’s SpaceX is now worth more than Tesla

Elon Musk speaks near a Falcon 9 rocket during his announcement that Japanese billionaire Yusaku Maezawa will be the first private passenger who will fly around the Moon aboard the SpaceX BFR launch vehicle.DAVID MCNEW | AFP | Getty ImagesElon Musk's space company, SpaceX, is now worth more than his electric car company, Tesla — at least on paper.
SpaceX is valued at $33.3 billion, investors familiar with the company's latest round told CNBC on Friday.Tesla's market cap was $32.8 billion at the end of trading Friday.
Musk is the largest shareholder and CEO of both companies, with a 54% stake in SpaceX and more than 20% ownership of Tesla.
SpaceX successfully launched 60 Starlink satellites into orbit recently, and has raised more than $1.02 billion since the beginning of 2019. Tesla shares have declined by more than 44% during the same period.
The electric vehicle maker has struggled to rein in its spending, while staking its future on success in China. Its effort to set up a factory in Shanghai began this year as trade relations between the U.S. and China rapidly deteriorated.
Until Tesla can manufacture its Model 3 electric sedans there, it faces steep import taxes in China. It also faces higher tariffs on parts and raw materials it buys from Chinese suppliers to make its batteries and cars in the United States.
Elon Musk, co-founder and chief executive officer of Tesla Motors Inc.Yuriko Nakao | Bloomberg | Getty ImagesMorgan Stanley analyst Adam Jonas said (on a May 22 call) that investors shouldn't rule out the possibility that Musk could use his SpaceX stake to “collateralize” Tesla. “There's a precedent for Elon Musk to think across his portfolio of companies,” he said, referencing the 2016 acquisition of SolarCity by Tesla.
The deal cost Tesla around $5 billion — it issued $2 billion in stock, and took on about $3 billion in SolarCity debt. It was also seen as a bailout for Musk, and his family — his cousin Lyndon Rive was the CEO of the residential solar installer, while Elon Musk and other friends and family members had personally invested in SolarCity as well.
VIDEO2:2602:26SpaceX launches internet satellites into spaceSquawk Alley

Here’s how a Fiat Chrysler-Renault merger could spark some mega auto deals

2017 Chrysler Pacifica BraunAbility is on display at the 109th Annual Chicago Auto Show at McCormick Place in Chicago, Illinois on February 9, 2017.Raymond Boyd | Getty ImagesFiat Chrysler's (FCA) proposed 50/50 merger with Renault could pave the way for a long-awaited M&A (merger and acquisition) boom in the sector, analysts have told CNBC.
The tie-up looks to strengthen FCA's position in electric vehicle technologies but would also create the third largest global automaker by production, behind Volkswagen and Toyota.
It's been lauded by many analysts, including Philippe Houchois, autos equity research analyst at Jefferies, who published in a note that there is nothing to dislike in a proposed merger that offers scope for synergies and restructuring.
“(It's) hard to disagree with the logic (of the deal) and with net synergies. We are positive on both shares with proforma combination still at low end of sector,” Houchois said.
Gaetan Toulemonde, autos equity research analyst at Deutsche Bank, said in a note that it would allow both groups to share platforms and “capture economies of scale at a time when the industry needs to invest massively in CO2 reduction (and) autonomous driving.”
VIDEO3:0103:01Renault would boost Fiat Chrysler in electric vehiclesClosing BellThe auto industry has long promised consolidation but has never fully delivered on market expectations. Now, under mounting pressure from structural changes including new technologies and stricter emissions standards, we could finally be on the brink of an M&A bonanza in the sector.
“There is certainly scope for a lot of co-operation throughout the industry, either through a full merger such as Renault-FCA or just sharing R&D or sourcing,” said Anna-Marie Baisden, Head of Autos, Macro Research at Fitch Solutions.
And Arndt Ellinghorst, the head of global automotive research at investment banking firm Evercore ISI, told CNBC he “wouldn't rule anything out at this stage as we know from public statements that various players are open to consolidation.”
Daimler and BMW recently struck an agreement to pool their mobility services to create a new global player providing sustainable urban mobility for customers. They have also joined forces on autonomous driving. If they are forced to compete with another mega automaker in FCA-Renault, Daimler and BMW could perhaps even explore deepening their ties.
“The recent FCA-Renault announcement confirms that the auto industry is changing and that cooperation will be one of the keys for future success. We are monitoring the next steps closely and certainly see the possibility that the merger can also create opportunities and potentials,” wrote a Daimler spokesperson in an email to CNBC.
VIDEO3:0703:07Cramer: Auto companies have too many employeesSquawk on the StreetAngus Tweedie, auto equity research analyst at Citi agrees that closer collaboration between Daimler and BMW would seem very logical given their similar target markets and therefore commonality of components. Areas of difficulty would be the shareholder structure and there also seems some opposition at both companies from an operational perspective. Like all European deals, headcount reductions would be difficult, Tweedie added.
Ford and Volkswagen have already forged a global alliance to develop commercial vans and medium-sized pickups together and have signed a memorandum of understanding to investigate collaboration on autonomous vehicles, mobility services and electric vehicles and have started to explore opportunities.
On the prospect of a bigger deal down the line for the two giants, Fitch's Baisden said there was appealing logic.
“Their strategies both focus on EVs and autonomy in the medium to long term and so with a challenging market that threatens their income, it would make sense.”
And don't forget about Peugeot. Multiple reports suggest the French carmaker was interested in doing a deal with Fiat Chrysler. If FCA consummates this deal with Renault, Peugeot will have to look elsewhere for merger opportunities.
Getty ImagesSome market participants suggest a tie-up between Peugeot and Jaguar Land Rover (JLR) could make sense.
“I can see how JLR would be an appealing partner in giving PSA exposure to the premium segment and also the US, which it is looking to return to,” said Baisden.
JLR has been struggling recently, posting losses in the first three quarters of 2017 before swinging to a small profit in the final quarter of the year. Further, PSA's chief Carlos Tavares has successfully turned around the Opel Vauxhall brand he bought from General Motors in 2017, demonstrating his ability to restructure and integrate new businesses.
Ellinghorst also wouldn't rule out Peugeot coming back for FCA: “They have shown interest in FCA before. (But) we must see how Renault and the French government reacts first.”
The European auto sector rallied on the back of FCA's proposal to merge with Renault earlier this week. Market watchers highlight that the positive share price moves show how undervalued carmakers are.
“There has been talk of consolidation for years. Now at the peak of the cycle, the market welcomes the fact that there is some action with regards to consolidation,” Ellinghorst told CNBC.
Peugeot and BMW did not respond to CNBC's request for comment.

Take a look at the most expensive SUV in the world: the $1.9 million Karlmann King

The Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCIf you're looking to spend $1.9 million on a new vehicle, an Italian armored car based on a Ford F-550 chassis is probably not on your radar. Karlmann is trying to change that.
Reclining alligator skin back seats on the Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCThe company operates from Los Angeles, has a factory in Italy and is largely financed by Beijing-based International Automotive Technologies. Its first product, the Karlmann King, is a massive rolling lounge complete with recliners, a coffee maker, champagne flutes, a massive TV and a price tag that makes it the world's most expensive SUV.
The exterior door hatch on the Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCKarlmann King to debut at the New York Auto Show.Source: Karlmann KingOn top of the stratospheric starting price, buyers can customize the King to their liking. Alligator-skin seats, real gold trim and specialty upholstery are all available for a price. Michael Nothdurft, Karlman's sales director, says a client in Africa ordered a Karlman King with a $3.5 million price tag.
View of the interior dash on the Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCOne big part of that additional cost: bulletproofing. Most King buyers opt for the bullet-resistant option, which adds at least $300,000 to the price depending on the level of protection clients want.
Enjoy coffee and champagne while riding in the Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCThe buyers of these bulletproof monster trucks range from clients in dangerous parts of the Middle East and Africa to real estate moguls and high-dollar watch traders in the United States. But for less security-conscious shoppers, Nothdurft stresses that the King is supposed to be a rolling work of art.
Reclining in the Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCIt's undeniably different than anything else you'll see on U.S. roads. It has extremely angular styling and is absolutely massive.
“This car is the most emotional car that you can see at auto shows,” Nothdurft told CNBC. “People either hate it or they love it.”
The backseat control panel on the Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCThe King is based on a Ford F-550 chassis. The F-550 a massive truck frame that Nothdurft says was chosen for its proven durability and ability to handle the weight of an armored luxury vehicle. The King maintains the 6.8-liter V-10, suspension components and transmission of the F-550 and is therefore limited to 87 mph. The interior, however, is bespoke.
The Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBCKarlman is looking to get a U.S. manufacturing line built in the next few months, but for now, the King is hand-built in Italy. For U.S. market cars, armoring takes place in the States.
The company currently has 20 buyers lined up in North America, Nothdurft said.
Buyers who order a King today should expect delivery in nine to 15 months.
The Karlmann King at the 2019 New York Auto Show.Adam Jeffery | CNBC

Ford recycles 1.2 billion plastic bottles a year for auto parts

An employee walks past a Ford logo in the yet-to-be-completed engine production line at a Ford factory on January 13, 2015 in Dagenham, England.Carl Court | Getty Images News | Getty Images Ford is trying to reduce its carbon footprint by recycling plastic bottles and using them to make vehicle parts.
The automaker uses an average of 300 recycled bottles per vehicle, roughly 1.2 billion plastic bottles per year, to make the underbody shields for all of their cars and SUVs as well as the wheel liners on F-Series trucks.
Ford said recycled plastic is ideal for automotive parts because of it's light weight, which gives the added benefit of improving the aerodynamics of vehicles. Better aerodynamics also promote fuel efficiency and have allowed for a quieter environment on the 2020 Ford Escape, according to Ford.
“The underbody shield is a large part, and for a part that big, if we use solid plastic it would likely weigh three times as much,” Thomas Sweder, a design engineer at Ford Motors, said in a statement.
The bottles are shredded into small pieces and sold to suppliers that turn them into fiber used to make sheets of plastic. Ford then uses these sheets to make the underbody cover for its vehicles.
Ford has used recycled plastic as far back as the 1990s. According to environmental advocacy group Earth Day Network, an estimated 9.1 billion tons of plastic has been manufactured since it's creation in the 1950s, and 91% of the world's plastic waste has not been recycled. Since it's not biodegradable, nearly all of that plastic is still in the world.
“We do it because it makes sense technically and economically as much as it makes sense for the environment,” Sweder said. “This material is very well suited for the parts we're making with it, and is extremely functional.”
Earlier this year, Ford announced that a number of its manufacturing plants will soon be powered by 100% locally sourced renewable wind energy.

Fiat Chrysler’s $40 billion proposed merger with Renault is no done deal

The logos of automobile companies (LtoR) Abarth, Lancia, Fiat, Alfa Romeo and Jeep are pictured at the entrance to the Fiat Chrysler Automobiles (FCA) at the Fiat Mirafiori car plant on May 27, 2019 in Turin, northern Italy.Marco Bertorello | AFP | Getty ImagesFiat Chrysler's proposed $40 billion merger with Renault, which would create the world's third-largest automaker, is far from a done deal.
The merger, announced Monday, is fraught with “significant execution risks” that could scuttle it altogether, according to Moody's Investors Service. If the deal gets done at all, it will take a minimum of a year and up to 18 months to complete, according to an executive at Fiat Chrysler briefed on the negotiations.
The companies both have complex business models — particularly French automaker Renault's alliance with Japan's Nissan Motor and Mitsubishi — and powerful executive teams, which complicates choosing leaders for the combined company, said Joe Phillippi, president of AutoTrends Consulting.
The deal comes at a critical time for the automakers. Global sales are slowing after nine years of growth, and the industry is trying to come up with extraordinary amounts of cash to invest in autonomous driving and electric vehicles.
'Historic deal'Jim Press, the former deputy CEO for Chrysler Group, called it a “historic deal” that will likely be followed by others in the industry.
“The consolidation in the global auto business is something that has to happen,” he said on CNBC's “Closing Bell ” on Tuesday. “The pressure on profits is increasing at a time when the investments required for the new technology of autonomous vehicles and electric transition, all of that is adding a significant burden on investments.”
The Italian-American automaker has offered Renault a 50-50 merger of equals that would create an 11-member board split equally between Renault and Fiat Chrysler, with one seat going to Nissan. Fiat Chrysler's shareholders would receive a special dividend of 2.5 billion euros (about $2.78 billion) to account for Fiat Chrysler's higher market value. Existing shareholders of both automakers would get half of the combined company.
Fiat Chrysler said the deal would save an average of roughly 5 billion euros (about $5.57 billion) a year without closing any plants, which is an important detail that should help smooth the deal with unions, politicians and regulators. France's Finance Minister Bruno le Maire told RTL radio on Tuesday he wants “four guarantees,” including “the preservation of industrial jobs and sites in France.”
Shaky groundThe deal is significantly complicated by the French automaker's role in the Renault-Nissan-Mitsubishi Alliance. Collectively, the alliance forms the world's second-largest automotive group, with 2018 sales of 10.8 million vehicles. Renault merging with Fiat Chrysler would create the world's third-largest automaker, with 8.7 million in annual sales.
The alliance itself is on shaky ground since its longtime chief, Carlos Ghosn, was arrested in November in what many consider a corporate coup orchestrated by Nissan, which has accused him of a variety of financial misdeeds.
“It's regressing fast,” according to a high-level executive with the alliance, who asked not to be identified because the internal discussions are private. He said the operation “could come apart” in the months ahead, with Fiat Chrysler's merger proposal adding to the ongoing friction.
The alliance, initially between Renault and Nissan, was formed 20 years ago when the French automaker invested $5.4 billion to keep the then-failing Japanese manufacturer from going under. Renault took a controlling stake in Nissan and subsequently increased that to 43.4%. The Japanese carmaker, in turn, has a 15% stake in its ally. Over those two decades, Renault and Nissan have claimed to develop a closely interwoven business relationship, with the two sharing platforms, engines and other technology as well as parts purchasing, among other things.
Carlos Ghosn, former chairman of Nissan Motor Co., leaves his lawyer's office in Tokyo, Japan, on Thursday, May 23, 2019.Toru Hanai | Bloomberg | Getty ImagesNot as hopedGhosn is a powerful and charismatic auto executive who wore multiple hats up until his arrest — he ran the alliance, was chairman of Nissan and CEO of Renault. Because of the structure of the alliance, however, the two companies haven't achieved all the benefits executives had hoped, Ghosn has previously said. Their engineering units, for instance, still operate largely autonomously, said the alliance executive.
That's partly why in the year leading up to his arrest, Ghosn was trying to orchestrate a full merger between Renault and Nissan that many industry executives believe may have contributed to Nissan's move to have him prosecuted.
Nissan has made it clear it doesn't want to merge with Renault, rejecting another merger attempt by the French automaker last month. The new proposal from Fiat Chrysler would effectively shelve those plans. Nissan and Mitsubishi would get about 1 billion euros ($1.11 billion) a year in “synergies” stemming from the merger, Fiat Chrysler said Monday.
Yokohama meetingExecutives from the three alliance companies gathered at Nissan's headquarters in Yokohama on Wednesday for a prescheduled meeting. Japan's Nikkei newspaper reported that Nissan wasn't opposed to the deal, while noting that “many details need to be worked out,” citing an unnamed Nissan executive who attended the meeting.
Since Ghosn's arrest, Nissan CEO Hiroto Saikawa has met with senior officials from Renault on several occasions. Both sides have attempted to put a positive face on their relationship. But Saikawa has stressed internally that there is no interest on the Japanese automaker's part for a full merger right now, the alliance executive said, adding that “hubris and arrogance” on the part of “senior executives at both companies” are making it increasingly hard to hold the group together.
Ghosn actually initiated merger talks in 2008 between Renault and Nissan and what was just Chrysler when it was teetering on insolvency, said a former Chrysler executive involved in those negotiations. The effort failed because of the U.S. automaker's troubled finance unit during the financial crisis.
Makes sense “The tie-up between Chrysler and Renault made sense in 2008,” Press said in a separate interview. He should know, as vice chairman and co-president of Chrysler at that time. “It makes even more sense today given the market strength of Fiat Chrysler [in SUVs and pickups] and their similar cultures that would make them uniquely suited to work well together.” Press now heads the RML Automotive dealer network.
One of the questions the proposed merger raises is how the new management structure would shake out. The consensus sees Fiat Chrysler Chairman John Elkann filling the same role at the combined company, say industry analysts and executives. Elkann is heir to the Fiat founding family, the Agnellis, who currently hold a 29% stake of the automaker's stock and 44% of its voting rights. Elkann played a critical role in the merger.
“He has the phone book,” said one of the executives briefed on the negotiations. Elkann is also critical in helping to smooth approval from the French government, which holds a 15% stake in Renault, these people said.
Renault's chairman, Jean-Dominique Senard, is the most likely candidate for CEO of the combined company, industry analysts and executives say.
Fight over No. 3There could be a fight over the No. 3 role, president, between the two companies' current CEOs: Thierry Bollore at Renault and Mike Manley at Fiat Chrysler.
Manley handled much of the nitty-gritty details of the deal, the executive briefed on the negotiations said. There were some questions raised in the press, though, about the timing of his elevation shortly after former CEO Sergio Marchionne's untimely death last summer. Manley currently has strong support from the automaker's board, industry analysts and executives say.
Bollore was a longtime colleague of Ghosn's, though that currently carries far less weight than it would have a year ago. European newspapers reported that Bollore's own promotion was also controversial, following Ghosn's unexpected arrest last year, and caused some tension on the board.
Unanswered questionsHow the operations and production might come together is a question yet to be answered. Among other things, would the merged entity maintain the broad portfolio of brands now in place? As part of the five-year plan outlined by Marchionne in June 2018, Fiat Chrysler's two namesake brands were set to scale back significantly, leading many analysts to question how much longer they might be around. In recent months, with sales continuing to weaken, many have begun to speculate that the Fiat marque could soon be pulled out of the U.S. market.
The other uncertainty is Alfa Romeo. Under the current plan — as with the prior one — that Italian marque is getting billions of dollars in product development funding. But sales of new models such as the Giulia sedan and Stelvio SUV have been disappointing.
“At least for now, we intend to continue following the five-year plan,” said the Fiat Chrysler executive. What might happen after a merger is another matter.
Surprise dealThe move by Fiat Chrysler to propose a merger with Renault caught many observers by surprise. After being appointed to replace Marchionne last year, Fiat Chrysler's Manley appeared to be downplaying his mentor's push to find a partner.
“I think partnerships and alliances are important and will continue,” Manley said during a media roundtable at the North American International Auto Show in January. “If there [are] ways we can get better return for our capital, if there [..

Barclays says Tesla is ‘stalling as a niche automaker’ and cuts its price target to $150

Elon MuskMike Blake | ReutersBarclays cut its price target on Tesla on Thursday and said the market is finally coming around to the firm's thesis on the automaker.
The firm also said Tesla is “stalling as a niche automaker,” and cut its 12-month price target to $150 from $192.
“Model 3 demand is stagnating in the US, the company still doesn't have a path to significant auto profitability and solar storage installations have declined sequentially over the past two quarters,” analyst Brian Johnson said.
“While Mr. [Elon] Musk is pivoting to the remaining 'hyberbull' full robotaxi scenario, his efforts to spring excitement around Tesla's full self-driving capabilities was broadly met with the appropriate skepticism. We expect more investors to gravitate back to Tesla's near-term fundamentals of demand, profitability, and cash generation, areas that are now more exposed as the blue pill thesis washes away.”
Shares of Tesla closed Wednesday at $189.86 and are down about 0.60% in premarket trading after the Barclays call. The shares are down by 40% this year and 20% this month alone as investors raise questions about the company's ability to deal with rising costs even after a capital raise. CEO Musk sent an email to employees on Monday asking them to control costs and that the second quarter could be a record for vehicle deliveries “if we execute well.”

Read Tesla CEO Elon Musk’s latest email urging employees to improve vehicle deliveries

Elon MuskJim Watson | AFP | Getty ImagesOn Wednesday, a new email from Tesla CEO Elon Musk to all employees at the electric car company called for employees to focus on making end-of-quarter deliveries better than they have been, historically.
As he did in recent weeks, Musk hammered home the notion that every employee should be individually focused on controlling costs.
In this installment, Musk reminds Tesla employees that the company's first quarter results fell short of investors' expectations, in part because Tesla was unable to make deliveries efficiently and on time.
Sales of Tesla's electric vehicles hit $3.72 billion in the first quarter which represented a 41% drop from the fourth quarter of 2018, when the company generated $6.32 billion in automotive revenue. In its first quarter vehicle deliveries and production report, Tesla said it delivered 63,000 vehicles during that quarter, down from a record 90,700 in the fourth quarter of 2018.
The company has given guidance that it will deliver around 90,000 vehicles in the second quarter, and between 360,000 and 400,000 for the year.
Tesla's relatively new CFO Zack Kirkhorn told investors on its first-quarter earnings call this year that “unwinding the wave” of uneven deliveries would be critical in helping Tesla achieve profitability later this year.
Here's the Musk's e-mail about deliveries from Wednesday.
To: Everybody
From: Elon Musk
Date: May 29, 2019
While our demand is strong, we have a lot of vehicle deliveries to catch up to in order to have a successful quarter.
Starting tomorrow, I will be holding skip-level calls with the America, Asia and Europe delivery teams every 2 days to understand what's needed to accelerate our rate of deliveries.
We also need to address the total cost of getting a car from our factory to the customer. Last quarter, there were many expedite fees and routing inefficiencies that led to higher than expected delivery costs. This makes it much harder for Tesla to break even.
Per my earlier email, if we execute well, Q2 will be an all-time record for Tesla vehicle deliveries and an awesome victory!
Super excited to make this happen with you!
WATCH: Tesla owner frustrated, so repairs his own Model S and says it's as easy as Legos
VIDEO5:1605:16Tesla owner frustrated so fixes his own Model S: easy as 'Legos'Tech

Tesla is rejiggering its Fremont factory to build the Model Y SUV and a Model S refresh

Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during an unveiling event for the Tesla Model Y crossover electric vehicle in Hawthorne, California, U.S., on Friday, March 15, 2019.Patrick T. Fallon | Bloomberg | Getty ImagesTesla is rejiggering its car factory in Fremont, California, to make way for production of the Model Y crossover SUV, as well as a refresh of the Model S with a more minimalist interior design and longer-range battery, according to several current and former employees.
These initiatives could raise costs again for Tesla, just as CEO Elon Musk has vowed to review every 10th page of outgoing expenses, personally. But starting up production of the Model Y in 2019 allows Tesla to tap into the growing SUV segment sooner rather than later, while a Model S refresh would help it maintain or grow its share within the declining market for luxury sedans.
The company has barely begun to place orders for new equipment to manufacture the Model Y, employees said. And while Musk has suggested that Tesla would probably make the crossover SUV in Fremont, Tesla hasn't officially announced that preparations in the factory had begun.
Making way for Model Y production in Fremont will require Tesla to combine Model S and Model X production into one line, according to the insiders. These lines at the car plant take up a significant amount of floor space today, at least partly because the S and X are each made with a lot of parts. The Model X is particularly complicated to build — its features include falcon wing doors that open up, rather than out — leading Musk to liken it to a “Faberge egg. ”
In addition to the Model Y, Tesla is planning on a full refresh of the Model S, which employees say will likely include an interior with the minimalist look and feel of the newer Model 3, the same drive units and seats used in the higher-end Model 3, and a battery that delivers 400 miles of range on a full charge.
The company is aiming for a September start of production for that Model S refresh.
Tesla did not respond to multiple requests for comment.
Tesla has recently been canceling factory tours because of “upgrades” being made to the factory, according to Musk, who didn't say exactly what those upgrades entailed.
Meanwhile, production has already slowed on the current S and X models. In the first quarter of 2019, Tesla laid off a portion of its Model S and X production staff and cut hours for those who remained, as CNBC previously reported. Today, Tesla only manufactures the S and X on day shifts during the week in Fremont. There is no weekend or nighttime production of those cars today, according to the current and former employees.
Last week, Tesla cut prices on its Model S by $3,000 and Model X by $2,000, and rolled out a free supercharging incentive to entice customers, causing some analysts to question whether demand is softening for these older, higher-priced models. This follows a set of upgrades in April that improved the driving range and charging speed for both cars.
On investor calls recently, Tesla reiterated guidance that it would deliver 90,000 to 100,000 cars in the second quarter of 2019, and at least 360,000 in 2019. It has not said how many of these would be Model S, X and Model 3 vehicles or, eventually, Model Ys.
Tesla shares fell more than 10% last week on investors' concerns over demand, profitability and the impact of U.S.-China trade clashes on the company. They recovered slightly after an email leaked in which Musk promised that Tesla was on target to meet its second-quarter goals.
WATCH: How Elon Musk's tweets might be affecting the latest price targets for Tesla
VIDEO7:3607:36How Elon Musk's tweets might be affecting the latest price targets for TeslaSquawk Box

Autonomous vehicle pioneer doubles down on technology Tesla CEO Elon Musk calls ‘freaking stupid’

Chris Urmson, co-founder and chief executive officer of Aurora Innovation Inc.David Paul Morris | Bloomberg | Getty ImagesA pioneer in autonomous driving is doubling down on a self-driving technology called lidar that uses sensors to help navigate through traffic — just a few weeks after Tesla CEO Elon Musk called the technology “freaking stupid.”
Aurora CEO Chris Urmson said his company bought Blackmore, which develops and manufactures the sensors, for an undisclosed sum. Light detection and ranging technology uses light in the form of a pulsed laser to measure the distance of objects from cars, drones and other gadgets.
VIDEO3:1403:14We aren't ready for autonomous driving: Consumer Reports' FisherPower Lunch “Lidar is critical for developing the safest and most reliable self-driving system, one that can navigate our roads more safely than a human driver,” Urmson said in a statement announcing the acquisition of Blackmore.
Urmson's belief in lidar is important given his track record and reputation developing autonomous vehicles. For years, Urmson ran the Google self-driving car project that was later named Waymo, the autonomous vehicle company which is widely regarded as the leader in driverless cars. Urmson left Google in 2016 shortly before the tech giant rebranded its self-driving car program.
Urmson's endorsement of lidar technology stands in stark contrast to the opinion of the Tesla CEO. In April, Musk was outlining his company's plan to have up to a 1 million robotaxi Teslas that will be completely autonomous.
Close-up of self driving minivan, with LIDAR and other sensor units and logo visible, part of Google parent company Alphabet Inc, driving past historic railroad station with sign reading Mountain View, in the Silicon Valley town of Mountain View, California, with safety driver visible, October 28, 2018.Smith Collection/Gado | Archive Photos | Getty ImagesThe key to that plan is Tesla's Autopilot technology. Tesla's Navigate on Autopilot system relies primarily on cameras that see the road and feed data to the car's computers, which in turn help navigate the car through traffic. Tesla's Autopilot does not use lidar, which is a suite of sensors capable of seeing around cars and trucks to help autonomous vehicles steer through traffic.
“In cars it is freaking stupid. It is expensive and unnecessary,” Musk said of the lidar technology. “Once you solve vision, it is worthless.”
Aurora, Waymo, General Motor's Cruise and other automakers and tech firms find Musk's vision of lidar to be short-sighted and wrong. They've invested heavily in using lidar in the autonomous vehicles and technology they are developing and testing.
In the case of Aurora, Urmson says Blackmore's lidar “can see further with less power, measure velocity instantaneously, and are less susceptible to the challenges associated with heavy weather.
WATCH: Best way to get autonomous vehicles on the road
VIDEO3:2903:29The best way to get self-driving vehicles on the roadCNBC's Meghan Reeder contributed to this article.