New EV Sales High



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Sunday Aug 5, 2018 New EV Sales High I was doing a check of the EVs that were listed on eBay UK and I  came across this little gem - "Other-Uk-Other-British-All-Models-Hatchback-0-0-Automatic-Electric".  This was not being sold by some private seller but by a dealer who actually had several of them all listed with the same description.  Would you like to take a guess what this was?. 


It turned out to be a Tesla Model S.  It is a pretty good illustration of why Tesla wants to market directly to the public rather than setting up a network of franchised dealerships.  Tesla has been in the news quite a bit lately with a larger than expected loss for the second quarter but with a prediction of showing a profit for Q3 and Q4.


It is the news about EV sales for July that really put a smile on my Face.  Tesla has been talking about increases in production rates for the model 3 and we saw a big leap in sales starting with 6,250 cars in May but falling back to 6,062 in June.  This was a bit of a disappointment for many as the quarter end is usually Tesla's best selling month in the quarter.  I have been predicting for some time now that Tesla would hold back cars so that they would pass the 200,000 mark, which triggers a cutback of the Federal tax credit, in early July, so that their customers would continue to received the full $7,500 dollars through the end of this Year.  In their recent second quarter conference call they confirmed that the 200,000th sale did indeed take place in early July although rather than hold back cars they sent a bunch of cars to Canada to meet orders there.


Tesla only gives out sales numbers at the end of each quarter so we don't know exactly how many model 3s were actually sold in July but the estimates done by Inside EV have proved to be very close over the years.  For July they are estimating that Tesla sold 14,250 model 3 cars in July, more than double the number sold in May and June.  Add to this an estimated 1,200 Model S and 1,325 Model X and Tesla sold 16,775 cars for the month.


July sales are not in yet as several companies have still to report sales and 1,323 of BMW's total of 1,859 cars still have to be allocated by model, but including the full BMW tally we are still at 27,531 cars sold.  This means that July is now the highest sales month ever for plug-in cars, well ahead of the 26,107 cars sold in December 2018.  If the companies not yet reporting run true to form then the final sales tally will probably be around 30,000 cars.


Model 3 sales averaged about 3,500 per week which is lower than the 5,000 units per week that Tesla has talked about but it appears that the bottleneck right now is in the delivery process and it is estimated that they may have had as many as 11,000 cars in transit at the start of August so I expect August sales to be even higher for this month.


The question is why Tesla opened up its sales of the current Model 3 variants to none reservation holders with a promise of delivery in 2 to 3 months.  The only assumption I can make is that current reservation holders are looking for the base model car which probably won't be available until the end of this rear at the earliest and possibly not until the second quarter of 2018.  Tesla needs to show profitability in Q3 and Q4 and the higher margin on the Long Range and Dual Motor version of the Model 3 will make profitability easier to reach if they can sell enough of these models to keep the production line humming at peak efficiency. 


It should be noted that the Model 3's closest competitor was the Toyota Prius Prime that sold 1,984 cars.  Tesla has made a lot of the sales numbers comparing them to other cars in the midsized Premium car segment such as the BMW 3 series and the Audi A4 which are selling in much lower numbers than the Model 3.  The press, that has been pushing negative articles about Tesla for months immediately jumped on this by saying that the Model 3 should be compared to the compact sedans.  I  thought I would take a look at some compact sedans and see how the Model 3 compared.


The Ford Focus sold 8,993 cars in August.  They did sell more than 14,250 in March and May of this year but less in all other months.  In fact the Tesla Model 3 outsold all of Ford's sedan models in July and you would have to  go to their SUVs (Ford Explorer 20, 243 and Ford Escape 20,630) to find a Ford vehicle that sold better than the Model 3.


Toyota is much stiffer competition but the Model 3 still didn't do so badly there either.  In July 2018 Toyota's luxury brand Lexus sold a total of 8,226 cars and 17,177 SUVs.  The model 3 outsold every single Lexus model and sold more that all their sedan models combined.  The Model 3 does have quite a way to go to outsell Toyota's top selling models though, with the Camry selling 26,311 cars and the Corolla selling 26,754 cars.


With sales of the model 3 starting to trend up it will become more and more difficult to talk about how low plug-in cars market share is.  In the future July, 2018 may be marked as the tipping point for plug-in sales.  We still have some questions.  Can Tesla keep up the pace of sales without the launch of the base version of the Model 3?  Can the other carmakers up their game and give Tesla some serious competition?  Will sales continue to rise when the Federal tax credit begins to draw down?  These questions will be answered over the next twelve months.


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