Tesla's Rapidly Growing Market Share In The U.S.

| About: Tesla Motors (TSLA)

Summary

A look at Model S market share since launch.

A look at Model X market share so far and assumptions going forward.

A look at Tesla's total market share in plugins.

The Tesla (NASDAQ:TSLA) Model S is generally categorized as a large luxury sedan and here is what the Model S market share looks like in the US in that category since launch:

Sources for all charts: InsideEVs, GoodCarBadCar (2016 data only reflects Jan - Oct.)

In 2016 almost all large luxury cars saw declines except the Tesla Model S and the BMW 7. The brand new BMW 7 had about half the sales of the Model S and the Mercedes S Class had about 75% of the sales of the Model S. This makes the Model S the leader in the segment for three years running. A new car company going from 0% to 30% in four years with a new car is nothing short of extraordinary and the numbers speak for themselves. Not even the new Mercedes S Class nor the new BMW 7 have shown this kind of growth.

However, some like to argue that the Model S is really more competitive in size with the midsize luxury segment. Here is what it looks like if we put the Model S in that category:

In this category, the Model S would be in the top 5.

What about compared to other plugin cars? Here's what Model S market share looks like if we lump the Model S in with all other plugins:

The Model S is the top selling plugin in the US. What about the Tesla brand as a whole? Combining the Model S and the Model X, here is what Tesla's share of the US plugin market looks like:

Tesla is the top selling plugin brand in the US.

Let's look at the Model X next. If we consider the Model X a large SUV, in 2016, the Model X took 12% of the large SUV market. On the other hand, if we consider the Model X a midsize SUV, it took 3% of the market. The Model X's primary competitors - Audi Q7, BMW X5 and Porsche Cayenne are all in the midsize category so I'll assume that the Model X is in that category.

Since the Model X is a very expensive SUV compared to the rest of the midsize SUV market, I make the assumption that the Model X will only take three quarters of the market share that the Model S took of the midsize car category. This is approximately close to the current reality of the Model S taking 4% share in 2013 and the Model X taking 3% in 2016. The midsize luxury SUV market is a much larger market than the midsize luxury car market with nearly double the annual sales. So even with a smaller market share, the Model X is likely to sell in higher numbers than the Model S, at least in the US.

I also assume that the midsize luxury SUV market continues to grow at the same pace:

With the assumptions above, Model X sales would look like this:

Basically the idea is that even with the Model X being only three quarters as successful as the Model S makes for great sales ahead. Of course both assumptions could be wrong. The luxury SUV market growth could slow and the initial Model X delivery flood could be to satisfy the pre-order flood.

Next let's look at the Model 3. I've previously written about how the market reacted to the announcement of the Model 3. Here are updated versions of the charts in that article:

There have been some arguments that 3 series sales have been replaced by SUVs but that doesn't explain all the gap:

The other explanation that has been offered up in the comments on my previous article is that these are normal cycles between new versions. This could be true for Mercedes, but definitely not for BMW. I'm not saying that the Model 3 is fully responsible for these drops. However, if the Model 3 manages to take as much market share as the Model S or the 2016 share of the Model X, it comes at an extremely inopportune time for the other luxury manufacturers. Most of them have no competition planned until at least the next decade. By then they will likely also have the Model Y to contend with.

My hope is that people inside these companies are looking at these charts and planning their responses and will surprise us with earlier launches of compelling cars. But who am I kidding. None of that is likely to happen as automakers were the first to start lobbying the future Trump government to avoid building greener cars.

In conclusion:

  • Model S is the best selling car in it's class and the best selling plugin in the US
  • Model X with only 3/4th the success of the Model S would be great seller
  • The Model 3 comes at a time when other brands are struggling with their compact luxury sedans
  • Nobody has any EV competition planned for any of the Tesla vehicles in the near future.

So I'm invested in Tesla, which I expect to rule the US luxury market in every segment that it competes in.

Disclosure: I am/we are long TSLA.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.