Posted on July 09, 2016 by Matt Pressman
Tesla Motors [NASDAQ: TSLA] has taken the automotive industry by storm after accumulating ~400,000 pre-orders for it's forthcoming, lower-priced Tesla Model 3. With such staggering pre-orders thus far, has the Model 3 already taken a bite out of the competition's car sales? It depends on how you characterize their competition. In one camp, there are those that lump the Model 3 in with other lower-priced electric vehicle contenders. And in the other camp, there are those who (perhaps more accurately) look at the broader gas-powered small-to-medium luxury sedan market. That said, let's take a look at both groups of competitors in order to evaluate if the Model 3 is siphoning off sales.
Above: Tesla Model 3 seen at Tesla HQ; Reddit: luxendary
First, let's look at the electric vehicle market segment where the Tesla Model 3 will "play" when it starts its vehicle deliveries. Based on Tesla's ~400,000 pre-orders, many have argued that the Model 3 could decimate, or at least impact, much of the plug-in electric vehicle (EV) competition. In terms of Tesla Model 3's competition in the plug-in electric vehicle space, the usual suspects cited in the media tend to be the Nissan Leaf and BMW i3. Looking forward, GM's forthcoming Chevy Bolt has gotten plenty of press as a so-called "threat" to the Tesla Model 3. But can these electric vehicles really survive the blockbuster pre-order frenzy from Tesla's newest electric car, the Model 3?
Above: Tesla Model 3 seen "out in the wild" in silver; Source: CleanTechnica via Drew Dmz Williams / Facebook group Tesla Obsessed
Already, according to Electrek, "as it turns out, Nissan’s LEAF sales are still in free-fall in the US and the Tesla Model 3 could have something to do with it. Nissan published its US sales report for the month of May and confirmed that it delivered only 979 LEAFs – down 53.5% from the same period in 2015. LEAF sales are now down 39% in 2016 versus the same period last year... [as] Tesla’s reservation process for the Model 3 took a lot of people out of the market." Furthermore, "Nissan is quite aware of the situation and actually launched a new ad campaign last month to attract Model 3 reservation holders. The ads are directly attacking Tesla’s reservation process." Check out the ad below.
Above: Nissan Leaf takes a direct shot at Tesla Model 3 reservation holders; Source: Electrek
What about the BMW i3? Even BMW Blog concedes that, "the Model 3 is offering an extremely enticing automotive proposition. It’s such an attractive package, in fact, that it could seriously put a damper on the BMW i3‘s sales, as well as every other EV." And, BMW might actually be running scared since the Model 3's landmark launch. Electrek reported BMW has actually pivoted away from EVs after the Model 3's launch: "BMW is putting its electric vehicle programs on the 'back burner' in order to focus its ‘i’ brand, under which the German automaker has been releasing its electric vehicles, on self-driving cars instead." Why? Well... according to Reuters, BMW is shifting its EV focus "after a lackluster response to its only fully battery-powered car, the i3, which recorded only 25,000 sales last year." Could this move indicate that BMW i3's most recent sales numbers continue to decline?
Above: Chevy Bolt (left) and BMW i3 (right) look striking similar to each other yet radically different than the sleek and sporty Tesla Model 3; Source: Buzz Smith
And, what about the forthcoming Chevy Bolt? Car Buzz reminds us, "the Chevrolet Bolt has had a tough time. Even though the Bolt looks like it could be a good car, its thunder has been stolen by the recently revealed Tesla Model 3... According to Karl Brauer, a Kelley Blue Book analyst, Chevy will be able to sell between 30,000 and 80,000 units in the Bolt's first year. This is nowhere near the amount of orders that Tesla has on the Model 3." Automotive News adds that GM's top brass is already worried: "If you are an executive at a venerable automaker whose company is working on the same technology, seeing crowds waiting in line to lay down a deposit for a Model 3 had to have been tough to watch."
Above: Matte black Tesla Model 3; Reddit: luxendary
But shouldn't we actually be looking outside of the electric vehicle market in order to see the bigger picture? Is the Tesla Model 3 cannibalizing car sales from gas-powered cars in its segment? CleanTechnica reports that... yes, Tesla's Model 3 is likely, "decreasing Nissan LEAF, BMW i3, and other pure-electric car sales. However, that market doesn’t seem to be affected to the tune of ~400,000 cars — [for context] the entire global EV market was just 540,000 in 2015... It seems likely that the bigger effect will be seen in the premium gasoline and diesel car market." That said, CleanTechnica looks at year-over-year sales of the small to medium luxury sedan market in June as a litmus test of sorts, and includes the gas-powered leaders in this segment like the Audi A3, Audi A4, BMW 4 Series, Mercedes CLA Class, and Acura ILX among others. Check out the table below.
Above: Small to medium luxury sedan market sales June 2015 versus June 2016; Source: CleanTechnica
Zachary Shahan at CleanTechnica reports that there's, "nothing to write home about for these automakers, and that’s amidst an overall increase in the US car market. Naturally, there are a variety of factors at play here. However, I’m not thinking up any significant, across-the-market influences that could be driving a considerable drop in demand/sales... other than the Model 3." He goes on to hypothesize, "let’s recognize that we’re still well over a year away from the start of deliveries, if everything goes as scheduled. That 35,000-car drop across the models in the table [above] could swell as we come closer to the Model 3 rollout."