it’s not just Europe where Model S is winning big. Back here in the U.S., “Model S dominated its market segment, selling more units than Mercedes S class, BMW 7 series, and Audi A8 combined. Furthermore, while Tesla saw its U.S. sales increase by about 10% over last year, S Class declined by 15.5%, 7 Series sales were down by 28%, Lexus LS sales declined by 25%, and Audi A8 gave up about 25% as well.”
Dergunov points out five reasons why Model S market dominance could prove “significant” for Tesla shareholders moving forward…
- It shows that Model S is capable of not only competing with electric vehicles, but it demonstrates that Tesla vehicles can dominate their respective automotive segments whether it’s competing with EVs or ICE vehicles.
- It shows that ICE auto buyers have a “strong willingness” to switch to Tesla automobiles, as indicated by declining sales in most other major competing manufacturers.
- It shows that even on their home turf in Europe, German automakers are not immune from relinquishing market share to Tesla.
- It shows that if Tesla can achieve this level of success in both Europe and the U.S., the trend can continue to other regions, most notably Asia.
- It shows that if the Model S can reach this level of success in the large luxury sedan segment, the Model 3 can reach a similar level of domination in the higher volume mid-sized luxury sedan segment.
Will Tesla Model 3 Lead Market Segment Like Tesla Model S Does? March 11th, 2018 by Matt Pressman on Clean Technica
Originally published on EVANNEX.
Recently famed Apple analyst Gene Munster predicted market share gains ahead for Tesla based on a survey executed by his firm Loup Ventures. It turns out there are other indicators that point to market share gains down the line for Tesla. With so much riding on the success of Model 3, Seeking Alpha’s Victor Dergunov remains convinced that a stock “breakout appears imminent … and new all-time highs [are] very likely” for Tesla.
 Above: Tesla’s Model 3 on the same road as Model S (Source: Michael Schoening/EVANNEX) |
Dergunov bases his assumptions on a variety of reasons, but one factor — Tesla’s pre-established Model S market dominance — could prove indicative of future success with Model 3. Across the pond, “Model S outsold Germany’s big three luxury sedan manufacturers on their own European home turf last year. Model S sales rose a whopping 30% yoy to 16,132 units in Europe. Model S sales came in well ahead of Mercedes S Class’ 13,359 units, and BMW 7 series’ 11,735 units.”
 Above: Tesla’s flagship sedan, the Model S (Instagram: beatus100) |
And it’s not just Europe where Model S is winning big. Back here in the U.S., “Model S dominated its market segment, selling more units than Mercedes S class, BMW 7 series, and Audi A8 combined. Furthermore, while Tesla saw its U.S. sales increase by about 10% over last year, S Class declined by 15.5%, 7 Series sales were down by 28%, Lexus LS sales declined by 25%, and Audi A8 gave up about 25% as well.”
 Above: A look inside the Tesla store (Instagram: beautyoftesla) |
Can all this success foreshadow future market share penetration for Tesla’s lower-priced Model 3 sedan? Dergunov points out five reasons why Model S market dominance could prove “significant” for Tesla shareholders moving forward…
- It shows that Model S is capable of not only competing with electric vehicles, but it demonstrates that Tesla vehicles can dominate their respective automotive segments whether it’s competing with EVs or ICE vehicles.
- It shows that ICE auto buyers have a “strong willingness” to switch to Tesla automobiles, as indicated by declining sales in most other major competing manufacturers.
- It shows that even on their home turf in Europe, German automakers are not immune from relinquishing market share to Tesla.
- It shows that if Tesla can achieve this level of success in both Europe and the U.S., the trend can continue to other regions, most notably Asia.
- It shows that if the Model S can reach this level of success in the large luxury sedan segment, the Model 3 can reach a similar level of domination in the higher volume mid-sized luxury sedan segment.
 Above: All three Teslas parked together (Instagram: elonmusk.manofcentury) |
And just in case folks thought that Tesla’s success (with Model S) was a “fluke” only possible in that particular market segment, Dergunov points out similar success (with Model X) in a vastly different SUV segment. Even on Germany’s home turf in Europe, he points out, “the Model X also sold extremely well, as European sales came in at 12,000 units last year. Tesla’s SUV outsold much of the competition, selling about as often as the Porsche Cayenne vehicle, and even beating out BMW’s popular X6 model.”
Related: Tesla Model S Crushes Large Luxury Car Competition (H1 2017 US Sales)
Tesla Model 3 Profit Target = 5x Higher Than Average Ford Vehicle March 12th, 2018 by Matt Pressman on Clean Technica
Originally published on EVANNEX.
It’s remarkable that Tesla rocketed from its IPO to surpassing Ford in value in just 7 years. Tesla’s prowess on Wall Street has left many investors miffed. After all, Ford recently announced 2017 sales of over 6.6 million cars worldwide. Meanwhile, Tesla barely cracked sales of 100,000 cars. How could an industry behemoth like Ford be overtaken by this younger, smaller Silicon Valley startup?
 Above: Can Tesla really outperform Ford? (Image: Petrolhead) |
Dave Lee at Tesla Weekly has some fascinating observations on this front. Lee notes, “There appears to be a narrative among Tesla skeptics where the quantity of cars Tesla produces is compared to major automakers [like Ford] to minimize Tesla’s achievements. … I’ll dive into this and show why the narrative is incorrect.”
Looking at Ford’s recently filed 2017 annual report, Lee reports that Ford “sold approximately 6,607,000 vehicles at wholesale throughout the world.’ Ford’s 2017 automotive revenue was 145.6B, which means that the average revenue per vehicle was roughly $22,000. Ford’s gross margin on automotive in 2017 was roughly 10%, and their profit margin (before taxes) was roughly 5%.”
Putting this in perspective: “For an average priced $22,000 car that Ford sells, their gross margin is $2,200 and their profit margin is $1,100. On average, Ford makes $1,100 per vehicle.”
 Above: A look at the new Tesla Model 3 (Instagram: washingtonsq) |
On the other hand, “let’s look at Tesla and the Model 3. Tesla is aiming for 25% gross margin on the Model 3 and mid-teens profit margin (let’s say 14%). The average price of the Model 3 is projected at around $42,000 … [so] the average gross margin on a Model 3 would be $10,500 and profit margin would be $5,880. Compared to Ford’s average vehicle profit margin of $1,100, the Model 3 would be 5x as profitable.”
Lee continues, “In other words, one Model 3 is worth (in terms of profits) the equivalent of 5 Ford vehicles. So, if Tesla can sell 500,000 Model 3 and 500,000 Model Y (their small SUV due in 2020) annually, that would be 1M vehicles at an average of 5x the profitability of Ford’s vehicles. So the equivalent would be 5M Ford vehicles.”
Taking it one step further, “Let’s add in the Model S/X to the mix.” Lee points to historical data on Tesla’s margins for Model S and X and extrapolates: “Profit margin on each S/X would be $16,200 (if we assumed an average sale price of $90k). That’s almost 15x as profitable as the average Ford vehicle. So, 100,000 Model S/X would be the equivalent of 1.5M Ford vehicles in terms of profit. Combine 1M Model 3/Y and 100k S/X and you have the equivalent of 6.5M vehicles from Ford.”
 Above: Tesla’s Model X and Model S (Image: EVANNEX) |
“Let that sink in,” Lee concludes. “If Tesla can achieve what they’re aiming for, then just 1.1M of their vehicles would produce the same profit as 6.5M vehicles from Ford. And Tesla would just be getting started.”
