Posted on January 27, 2017 by Charles Morris
After pulling back in 2015, plug-in vehicle sales roared ahead in 2016 - sales were up 38% over the previous year, according to a recent assessment of the market from FleetCarma. Leading the electric charge is Tesla Motors [NASDAQ: TSLA], which accounted for 29.9% of the plug-in market, as reported by InsideEVs. That’s almost double the market share of the second-place automaker, Ford, whose three plug-in offerings took just under 16% of sales. GM came in a close third, as the Chevy Volt took 15.5%.
Above: Tesla Model S and X vehicles charge at Supercharger station (Instagram: dailytesla)
As the electric vehicle (EV) market has grown, Tesla has grown faster. Its share of plug-in sales has grown from 14% in 2014 to 22% in 2015 to almost 30% in the past year. This might seem even more impressive in light of the fact that the number of plug-in models available in the US has also grown during that time period, from 22 models in 2014 to 31 at the end of 2016, except for the fact that most of these vehicles are compliance cars or low-volume niche models that aren’t really in the running. For a 13-year-old company to beat some of the world’s largest and most established companies is an impressive feat, but in this case it’s not really that surprising. There are a couple of obvious reasons why Tesla dominates the electric space.
Above: Tesla's Model S and X account for nearly 30% of all EV sales in 2016 (Source: FleetCarma)
First, its plug-in vehicles are, by pretty much all accounts, the best. Only now that the Chevy Bolt is beginning to arrive in showrooms is there another EV with anything close to the range of Tesla’s two offerings, and there is no other EV with anything close to the performance that they deliver.
Above: The new Chevy Bolt is the only electric vehicle with comparable range to a Tesla (Image: Motor Trend)
Second, while other automakers chose to electrify smaller B-segment models, Tesla chose a wiser (if counter-intuitive) strategy. By offering a larger luxury model, the California trendsetters targeted buyers who don’t mind paying the hefty price tag that still-expensive EV technology demands. The Volt and LEAF are much more expensive than their gas-burning cousins the Cruze and Versa (and many consumers don’t see the difference), but Models S and X compare favorably price-wise to their hapless competitors. That’s why Model S dominates the large luxury sedan segment, and Model X already ranks #3 among luxury SUVs.
Above: The gorgeous luxury Tesla design aesthetic (Image: InsideEVs)
The third reason has to do with missions and motivation. As I and other EV writers have said many times, the legacy automakers are building EVs mainly because government regulators are forcing them to. Their lackluster sales are not a failure of engineering - most of these are excellent automobiles - but of marketing.
Above: A look at the Nissan Leaf and Chevy Volt (Image: Motor Trend)
Will Tesla’s sales success continue? There are (at least) two schools of thought. Some pundits have long predicted that, once the big boys decide the time is ripe for EVs, they will use their vast marketing resources and economies of scale to bury little Tesla. At the other end of the spectrum, some predict an Innovator’s Dilemma scenario, in which the dinosaurs of Detroit are simply unable to make the transition, and slowly wither away, as Tesla and perhaps other startups take over the auto industry.
Above: Overview of EV sales in 2016 (Source: FleetCarma)
Of course, the future may lie somewhere between these two extremes, or something entirely different may happen - we might all decide to give up automobiles altogether, and retire to an inner life of the mind. Who knows? One thing however, is certain. Until the day that the major OEMs start thinking of plug-in vehicles as a profit center instead of an R&D project, Tesla will continue to dominate the EV market.