With all the snow in January, and a sore leg, instead of biking or walking I was waiting for buses a lot. I noticed a lot of upscale cars passing by the bus shelter, including more Teslas than I would have expected. Treehugger was one of many that announced, Tesla sales crush every every other large luxury car in the market. Many of those articles were citing sales numbers from EVObsession’s article, Tesla Crushing Incumbents In Large Luxury Segment. EVO divided 2015 US sales numbers by model, which put Tesla’s Model S at the top, but below I have combined them by manufacturer:
28,806 Mercedes-Benz S & CLS Class
25,502 Tesla Model S
17,438 BMW 7 & 6 Series
12,711 Audi A7 & A8
7,165 Lexus LS
4,985 Porsche Panamera
3,611 Jaguar XJ
Despite no appreciable dealer network, Tesla is competing well against Daimler-Benz, BMW and VW/Audi in the luxury segment. The Model S is the only car to have seen increased sales (+51%), the rest dropping some five to sixteen percent from 2014 to 2015. It makes sense that smart people with means would be hedging against an eventual rise in oil prices by purchasing a car with a very serviceable range that can be charged at home. The Tesla even carries an aura of environmental responsibility, though it accelerates better than the ICE models against which it competes.
After seeing these numbers, one might expect that Tesla’s introduction of the the $35,000 Tesla Model 3 will be another eventual victory. But according to former TTAC alum Ed Niedermeyer, writing for Bloomberg, Tesla Will Get Trampled by the Mass Market:
… what explains the company’s dismal earnings report on Wednesday and the 40 percent plunge in its shares this year? … Perhaps it’s because investors finally understand that the company is going to struggle mightily to ramp up production to the scale required to compete outside its luxury niche. Think about it: If even with all its hype and brand prestige it can’t make money on its high-price, low-volume Models S and X, why should anyone expect Tesla to do so on a new car that starts at half the price? … a huge amount of each unit’s cost would still be tied up in expensive batteries, where savings are going to be very difficult. Tesla will have to cut costs to the bone to reach the targeted price for Model 3, meaning all the features that surprised and delighted consumers in the Model S — long range, rapid acceleration, a high-tech interior and innovative design– will be lost.
In addition to Niedermeyer’s points, Tesla is what the energy depletion crowd calls a Subsidy Dumpster. As I previously quoted from the LA Times:
Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups. …
If that support should dry up, or be insufficient against Model 3 losses, Tesla will go under, or will be bought out by one of its major competitors.