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EU Market Situation and Outlook

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The big headwind on European demand is exchange rates. The dollar is way up against all European currencies. This is going to force Tesla to increase prices in most of Europe and will therefore hurt demand.

It's times like this that I wish the US government manipulated its currency the way China does: sell lots of dollars to drive the dollar down and make our exporters more viable.
 
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When you are constrained by factor X (whatever that is, let's assume battery supply for sake of argument) and factor Y (let's say demand) changes, one of two things happens. Either Y becomes the new constraint, or... nothing changes. European demand isn't, IMHO, enough to make global demand the new constraint. So I'm not worried.
 
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The big headwind on European demand is exchange rates. The dollar is way up against all European currencies. This is going to force Tesla to increase prices in most of Europe and will therefore hurt demand.

That is not correct. Just take a look at the 1 year history: the dollar is still in the middle of its range of the last year.
 
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Well, apparently the currency movements in Norway were also prone to raising the price of Teslas, and caused sales to slide. That and Britain's fall in the pound will probably have a pretty substantial effect.

Thanks for pointing out that the euro hasn't moved against the dollar much. Hopefully Tesla can make up the drop in Norway and Britain sales in the Eurozone, which has been a persistently weak market so far. I do not understand why it's been weak, so maybe it will become strong without warning?
 
The Norwegian Krone slide was precipitated by a slide in Oil prices.

Which hurt the real economy.

The slide in Pound Sterling is psychological and can recover next week or next month.
USD to Euro is .90 as of today.
chart


USD to Pound Sterling is .78 as of today

chart


USD to Norwegian Krone is 8.51 as of today

chart
 
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Thanks for pointing out that the euro hasn't moved against the dollar much. Hopefully Tesla can make up the drop in Norway and Britain sales in the Eurozone, which has been a persistently weak market so far. I do not understand why it's been weak, so maybe it will become strong without warning?

Well, I can only speak for Germany, but over here I guess part of the reason is Tesla's pricing policy. Take the Model S. Ever since its launch its price has increased year after year, and quite a bit at that. It used to be simply an expensive vehicle, now it is a pure luxury car. That fact severely limits its market potential. There used to be an expectation that BEVs would get cheaper over time, as batteries drop in price and other economies of scale begin to take effect. The opposite has happened over here, at least with Tesla. Of course a Nissan Leaf has become ever cheaper over time.

Remember, even a naked bare-bones base S60 (non-D) is 77K Euro (85K USD) over here.
Add in a few options (metallic paint, pano roof, AP, premium upgrade, cold-weather package, air-suspension) and your S60 (still non-D, standard wheels, standard seats & trim, no sound package, no rear child seats, no onboard charger upgrade) is already over 90K Euro (100K USD). A fully optioned S60 (non-D) is 101K Euro (112K USD). For that you already get a very well-optioned S-class (for example S 300 h). And we are still only talking about an S60, not even the D, let alone anything like a 75, 90 or even a P90.
Now I am not trying to suggest that the S-class would be a real alternative as of course its electric-only range is pitiful, I only wanted to highlight one possible reason for the lacklustre sales figures. And the fact that Tesla is not going to profit from our new EV incentive program won't help either.
Of course, Germany is a "rich" country, but the majority of car buyers still doesn't have the budget for a Model S or X. And even those a bit more well off usually buy cars in the 50K to 80K Euro range max. The market for 100K+ Euro cars is marginal.

It will need the Model 3 to truly make sales figures pick up. Model X won't do the trick as it is even more expensive that the S (base Model X 60 starts at 87K Euro / 97K USD).
 
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And yet Model S is top selling BEV in Germany for June 2016.

Pl Model Sales
1 Tesla Model S 226
2 Renault Zoe 225
3 Renault Twizy 101
4 Volkswagen e-Golf 97
5 Audi A3 e-Tron 96

And did 3rd best overall in its class of car.

PI Model June 2016
1 Mercedes CLS 319
2 Audi A7 268
3 Tesla Model S 226
4 BMW 6-Series 131
5 Porsche Panamera 80

EV Sales: Germany June 2016
 
Quite correct, but look at the absolute numbers: 226 (and that is in a end-of-quarter month, Jan through May was 38 - 91 - 267 - 86 - 50). That is miniscule, just like the other cars in its class. Total new registrations in June were 339,563 (of which said luxury vehicles made up 2,848 or 0.84% in total - 899 of which were Mercedes S class by the way). Like I said, the market potential for vehicles in that price range is negligeable. Of course, the Model S did quite well in its segment, but the question neroden had to which I answered (for Germany) was why the market for Tesla was so weak in Europe in general.

Now take a look at cars in the price bracket a top of the line Model 3 will likely end up with (I would put an educated guesstimate at around 55 to 60K Euro) - numbers are for June of course:

Merc C class: 6,681
Merc E class: 3,748
Audi A4: 6,874
Audi A5: 1,934
Audi A6: 3,604
BMW 3series: 3,681
BMW 4series: 1,785
BMW 5series: 2,857
VW Passat: 7,006

Now imagine the sales potential for Model 3.

What is important to know also is that the new incentive scheme has only just launched. The effects will therefor only be noticeable from sales of mid-July and onwards as the incentive can't be applied for retroactively.
 
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Well, I can only speak for Germany, but over here I guess part of the reason is Tesla's pricing policy. Take the Model S. Ever since its launch its price has increased year after year, and quite a bit at that. It used to be simply an expensive vehicle, now it is a pure luxury car. That fact severely limits its market potential. There used to be an expectation that BEVs would get cheaper over time, as batteries drop in price and other economies of scale begin to take effect. The opposite has happened over here, at least with Tesla. Of course a Nissan Leaf has become ever cheaper over time.

Remember, even a naked bare-bones base S60 (non-D) is 77K Euro (85K USD) over here.
Add in a few options (metallic paint, pano roof, AP, premium upgrade, cold-weather package, air-suspension) and your S60 (still non-D, standard wheels, standard seats & trim, no sound package, no rear child seats, no onboard charger upgrade) is already over 90K Euro (100K USD). A fully optioned S60 (non-D) is 101K Euro (112K USD). For that you already get a very well-optioned S-class (for example S 300 h). And we are still only talking about an S60, not even the D, let alone anything like a 75, 90 or even a P90.
Now I am not trying to suggest that the S-class would be a real alternative as of course its electric-only range is pitiful, I only wanted to highlight one possible reason for the lacklustre sales figures. And the fact that Tesla is not going to profit from our new EV incentive program won't help either.
Of course, Germany is a "rich" country, but the majority of car buyers still doesn't have the budget for a Model S or X. And even those a bit more well off usually buy cars in the 50K to 80K Euro range max. The market for 100K+ Euro cars is marginal.

It will need the Model 3 to truly make sales figures pick up. Model X won't do the trick as it is even more expensive that the S (base Model X 60 starts at 87K Euro / 97K USD).

I do not understand how you can draw comparisons between S60 and S300 h. The S300 h is an example of nice coachwork underpinned by underpowered, outdated (Diesel !!!) 4-cylinder powertrain. Tesla S60, on another hand, has the most technologically advanced powertrain in the world, unmatched by anything currently produced by other companies. S60 beats S300h by almost two seconds in 0-62 - an eternity as far as performance is concerned (5.8 vs. 7.6 seconds).

Simply put, half of the car is missing in S300 h - I bet opening the hood would reveal enough space for a person to stand inside. These two cars are not even in the same league.
 
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Hmm. Interesting points here.

What is the situation with import taxes, and for that matter, VAT, on Teslas sold in Germany?

It is quite possible that Tesla receives more revenue for a Model S sold in the US -- especially after considering shipping costs -- even though the selling price to the customer in Germany is higher than in the US. If this is the case, then Tesla will pretty much ignore low sales in Europe as long as they can sell more in the US.
 
S60 beats S300h by almost two seconds in 0-62 - an eternity as far as performance is concerned (5.8 vs. 7.6 seconds).

In the German market, the ability to maintain a top speed is a more important performance metric. I still think that's one of the reason why Tesla is doing a little worse in that country than you'd expect compared with for example neighbouring Belgium.
 
In the German market, the ability to maintain a top speed is a more important performance metric. I still think that's one of the reason why Tesla is doing a little worse in that country than you'd expect compared with for example neighbouring Belgium.

Not sure I follow this - Model S has no problem maintaining top speed...

I think that the main impediment to the growth in German market is the presence of domestic auto manufacturers that enjoy support of German government and people...
 
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I do not understand how you can draw comparisons between S60 and S300 h.

Pretty clearly to me - they were being compared on the basis of being similarly priced.

Exactly what adiggs said.

@vgrinshpun: Of course you are right, and I totally agree with you, but I am not in the market for either of these cars anyway. It all came down to answering neroden's question of why the market is so weak, to which I replied and tried to explain.

Well, by this standard Tesla wins hands down: better technology and more performance at the same price, except, of course, if customer values coach work above everything else...

Problem is, over here BEV tech is not (yet) seen as "better" by the majority of people. Quite the contrary, many only see its problems (range, recharge times, price, longterm reliability). And performance is also relative. As I have agreed to in another post, maintainable performance is what most people want over here. Now again, I am not talking about myself, but about the majority of the car buying public (not just in the luxury car segment) in Germany.
 
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