Today's topic might be Tesla's Q4 financials, but the big question on everyone's minds is the Model Y and when the company expects to launch the vehicle in 2020.

The Model 3 has proved that Tesla can mass produce a vehicle and bring real volume to the electric market, but the following act is the most important. The Model Y's design might not have broken the internet like the Cybertruck did during its unveil, but with its competitive pricing and range, it has the potential to be Tesla's best-selling vehicle and is paramount to the company's long term success.

The Timing Has Never Been Better:
The small SUV segment is the most popular in the US, and sells well around the globe. SUV sales are expected to be 51% of the U.S. market in 2020 - the first time exceeding half of the market in our history. Electric vehicle sales are expected to increase by 6% in 2020 which can be seen as positive news for Tesla as the market needs to grow in order to create better infrastructure and awareness.

The Competition Isn't As (Price) Competitive:
The Model Y will enter a market in which luxury players already exist but at a much higher price point than the Model Y:

• The average transaction price for the Audi eTron in December 2019 was $75,524


• The average transaction price for the Jaguar iPace in December 2019 was $77,109

Neither vehicle is moving the market much, combining for 7,963 in annual sales last year. Mercedes Benz EQC will be joining them later this year but with an expected starting price near $70,000. Edmunds' sales forecast for the vehicle is conservative at less than 5,000 units in 2020.

The Model Y could face challenges from hybrids, a phenomenon not particularly faced by Tesla in the past as some high volume, well known competitors are entering the space dominated by the Toyota RAV4 hybrid which sold over 92,000 units in 2019 and has an EPA rating of 40 MPG combined.

The Honda CR-V is joining and Ford Escape is re-entering this space with EPA ratings expected to be in the 40 MPG range (the Escape hybrid is for sale right now although inventory is limited at this point in time).

For many consumers, hybrid vehicles might provide the relief in fuel economy they are looking for, and as a result they may not feel the need to make the jump to an EV. While these are mainstream nameplates with massive brand recognition, they aren't coming cheap. According to Edmunds data, the RAV4 hybrid transacted at $33,951 last month.

Tesla got a bit lucky in that the market evolved around them: unplanned, the Model Y might slide right in the sweet spot for the EV crossover market. It has a more prestigious brand than the mainstream hybrid nameplates but comes at a significantly less cost than the rest of the luxury competition.

Although the EV crossover market is expanding, most EV buyers stay within the EV market. Edmunds data reveals that cross shopping is nearly exclusive to EV models, suggesting that cross shop with hybrids will be limited:

Jessica Caldwell is the Executive Director of Insights at Edmunds. You can follow her on twitter at @jessrcaldwell.