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EU Market Situation and Outlook

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How many cars gets sold annually in Norway in Tesla’s segment? I mean how many cars Tesla would sell in Norway without tax exemptions?

I think it is worrisome, that 50% of Tesla’s EU sales is depended on one country’s tax exemptions.


I think more important than Norway's tax exemptions are Norway's punitive taxes on gas guzzlers.

BMW 760Li is $325k while P85D is $100k.

Adding 25% VAT to Tesla won't change the equation all that much.

By the time Norwegian/European BEV tax benefits are gone Tesla should be manufacturing inside the EU.

Removing $6k transatlantic shipping cost, the need to disassemble and reassemble to avoid 10% tariff,and maybe an EU-USA trade deal removing all automotive tariffs.
 
I think more important than Norway's tax exemptions are Norway's punitive taxes on gas guzzlers.

BMW 760Li is $325k while P85D is $100k.

Adding 25% VAT to Tesla won't change the equation all that much.

This!

Either way you look at it it's two sides of the same coin: Tax brakes on EVs or high taxes on the polluting alternatives give the same results: If you want to own a car you have to look at what your money is getting you and here a Tesla or any other EV makes that much more sense financially. The VAT will be gradually added to EVs but it shouldn't change things that much. Also with each year EVs are getting cheaper because of economics of scale and battery costs. ICEs are already as cheap as they will ever get IMO.
 
Talking to potential customers in Switzerland it is indeed the huge size of the car that is limiting sales potential the most, just as much as for Panameras and the like. Until recently also the lack of 4WD was often mentioned (going uphill on snow). Considering this, sales in that segment are very good. Another factor is that, right from the start with the Roadster, sales and services were managed very professionally by an unusually competent team.
Perhaps the general preference for powerful cars (mountainous), short distances and speed limits of at the most 120 Km/h on motorways, have their share. Also electricity and power points are not hard to come by.

Switzerland is often considered as a test market for new car models. Fleet sales are not prevalent (as in Germany) and there is no local car industry to cuddle. As purchases are also not subsidized, the current sales level in the very large car segment could be an unsubsidized number to aim at.
 
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How many cars gets sold annually in Norway in Tesla’s segment? I mean how many cars Tesla would sell in Norway without tax exemptions?
There isn't any good statistics on the subject that I know about, but looking at new cars on the largest online website for selling/buying cars, the statistics are roughly:

50-100k: 6
100k-150k: 102
150k-250k: 423
250k-500k: 345
500k-600k: 55
600-700k: 51
700k-800k: 51
800k-900k: 66
900k-1M: 43
1M-1.1M: 6
1.1M-1.2M: 16
1.2M-1.3M: 16
1.3M+: 40
Total: 1448

Okay, so currently, the Model S is priced between 500k and 1M, a segment of the market that is about 18.4%. If you had to pay 25% VAT, the Model S would cost between 650k and 1.25M, which is about 14.8% of the market. That's not completely terrible, but I think you could count on demand possibly dropping off by 25-50%. Even if you can afford a Model S, with VAT, the Model S will be less of a clear choice in comparison to other similarly priced cars.
I think it is worrisome, that 50% of Tesla’s EU sales is depended on one country’s tax exemptions.
Well, the situation *is* improving. There was a time when Norway contributed with 20-25% of global demand, but now we're more in the 10% area.
 
Ms Merkel's stubborn refusal to go along with the rest of the EU on vehicle CO2 emission reductions argues otherwise.
And it does have a tax based on engine size,number of cylinders, and horsepower.

For a start, it is Mrs. Merkel. She is married you know. ;-)

But about our car taxation: sales tax is 19%, no matter what kind of car.
But vehicle tax depends heavily on engine size (and therefor fuel consumption/CO2 emissions), meaning that fuel efficient cars with small engines pay far less than gas guzzlers (and Diesels as well by the way, but that is because Diesel itself is taxed quite a bit lower than gasoline).
BEVs don't pay any car tax for ten years (reduced to five years for cars purchased and registered from 2016 onwards - bad idea imho, they should at least stick to the ten year exemption, it's the only subsidy we get for BEVs here).

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Germany will not pick up until Tesla is competetive. Which they sadly are a long way from being.

1. Fleet sales are a very big part of the german high end market and it usually requires volume discounts. If you don't do volume discounts you don't sell any cars. Period.

2. Options and feature list still have a very long way to go until it catches up with even mid class bmw (5-series) or mercedes (e-class).

3. Same goes for exterior fit and finish as well as interior comfort.

I think they need to be fully on par with the german brands inat least 2 out of the 3 points above before sales start to pick up. For germany to become big market, all 3 are needed.

+1 on all points.
Problem over here is, Model S is priced as a luxury car. And the vast majority of those cars here are not private cars but fleet/corporate sales. As matbl said, large discounts for such cars are very common here, and even for private purchases, people expect to get discounts of at least 10 percent, with some models discounts can go as high as 30% and above, especially on foreign and less popular models. As Tesla isn't willing to negotiate on the price, they will keep having a hard time for now.

Plus, even if one is in the market for a BEV, remember that there are German built alternatives like the i3 or the e-Golf, which are far more affordable, have negotiable prices, and offer stuff Model S doesn't.

I sure hope to see more Model S around, but from what I can see in Frankfurt at the moment, they are not getting more common. I keep looking out for them, but other than test drive cars there aren't many to be seen. Perhaps one a week. Actually there were more around in the months before Christmas than there are now. But perhaps the P85D will really change some things.

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My take on slower uptake of Tesla in Europe as compared to US market:

Tesla's size is too big for many European towns and streets. Tesla can not do much about this.
...
My guess would be that car buyers in Europe would be more sensitive to petrol prices rather than Tesla price.

+1 on the size argument. It is definitely too large for European tastes/roads/cities/parking garages etc.

But more important is price. One shouldn't set to much hope on the P85D in Germany either. Even naked withouth options its 106K Euro at the moment. The market for such expensive cars is extremely small anyway. Factor in the "never heard of Tesla" factor, plus the general anti-American-car sentiment and the "not really popular BEV" argument and you arrive at quite a lot of question marks for Tesla over here.

Oh and no, we seem to be less sensitive to petrol prices than to car prices, especially now that petrol prices have dropped quite a bit in the last few months due to low oil price (even if you factor on the big drop in the value of the Euro).
 
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I think more important than Norway's tax exemptions are Norway's punitive taxes on gas guzzlers.

BMW 760Li is $325k while P85D is $100k.

Adding 25% VAT to Tesla won't change the equation all that much.
No doubt that the Model S will continue to be waaay more attractive than a 760Li. But given that the number of 760Li sold in Norway is approximately zero, that doesn't mean that demand for the Model S will be very high. If a bare 60 kWh Model S were priced at 650k NOK including 25% VAT, that puts it in the same price range as a 520d xdrive Touring with some equipment, and it comes with AWD, tow hitch and more space. Most people who buy a Model S in Norway are middle-class people, who certainly value luxury, the environment, etc, but value utility even higher.

Currently, the 520d xdrive touring is similarly priced as a reasonably equipped 85D. That's a comparison that the Tesla can come out of much better. They both have AWD, at least, and the 85D comes with longer range than the 60 as well as supercharger access.

By the time Norwegian/European BEV tax benefits are gone Tesla should be manufacturing inside the EU.

Removing $6k transatlantic shipping cost, the need to disassemble and reassemble to avoid 10% tariff,and maybe an EU-USA trade deal removing all automotive tariffs.
The assembly/disassembly isn't done on cars sold in Norway, as we aren't behind that import barrier. But I definitely agree that Tesla should be doing the manufacturing in the EU within a few years. The shipping costs are one thing, but an even more important factor is the currency fluctuations. A year ago, the USD/NOK ratio was at around 6, now it's at 8.1. That means that for Tesla to make the same margin as they did a year ago, they need to increase prices by around 35% (from the prices a year ago). Some of this price hike has already been implemented, and Tesla is also having to accept lower margins on cars sold over here. This will have a significant impact on demand and profit, and the effect will be felt in the coming months.
 
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The more the EUR drops compared to USD is going to be catastrophic for European demand IMO. I lived in Spain in the 90's and have visited the EU about 20 times since then. I just got back from Italy in November when the EUR was was $1.22 which I though was a bargain compared to the previous years when it was bumping $1.40. Today, about $1.05. Some are saying it will go below parity. Americans are going to start buying more high end European luxury cars because those prices are going to come down (I think?) but the Model S is getting more expensive each day in Europe. This is not good for Tesla.
 
Tesla's size is too big for many European towns and streets. Tesla can not do much about this.

Big +1 here.
My parents have absolutely fallen for Model S but have (un?)fortunately opted to wait for M3 since MS simply too big to be convenient in European inner cities.

I'm not sure about a lack of awareness, at least not in auto-interested circles. Have spoken to many old-school german-stlye petrol heads who were surprisingly full of praise for Tesla, much more so than I expected. Very well informed too. Maybe it's different in the wider public though? It does seem that Tesla gets a pretty good amount of coverage in German auto magazines.
 
BMW 760Li is...

This illustrates a common misconception pretty well.
I don't think the MS is cross-shopped against a BMW 7 series in europe. It's more likely cross shopped against a 5-series (or mercedes e-class or audi a6 but I'll use the BMW to illustrate my points).
And then it's not cross shopped against a M5 or even 535, it's cross shopped against a 520d touring (or possibly a 525 but not more).
In sweden a 520d have a base price of 391400 SEK while a base S85 starts at 831950 SEK. See the problem?
To have comparable equipment the 520d goes up to 515000 SEK. Still 315000 SEK to go.... (~36000 USD)
What do you get for those 315000SEK? Basically you get electric drive and a big center screen. But you also give away interior comfort and exterior finish.
Yes, you also get alot more horsepower and performance, but generally we don't care. 180-200 hp is enough...

So what should tesla do? As long as they are production constrained, nothing. A company that can sell all it can produce with high margin is a good thing. But when an increase in demand is wanted, they must do something.
With the euro crashing, it might be time to reevaluate the strategy to have the same price globally, most car companies doesn't.
I also think it really need to do a major redesign of the MS interior. New seats (Next gen seats are just ridiculously over priced), new back seat (possible to split 40-20-40, integrated arm rest, etc), proper devently designed center console, trunk space with options for 12 V power, fastening items etc, and more and more.
Then add 10-15 exterior colors and 10 more rim options and the MS is starting to get on par...
(don't have time to write more now)
 
This illustrates a common misconception pretty well.
I don't think the MS is cross-shopped against a BMW 7 series in europe. It's more likely cross shopped against a 5-series (or mercedes e-class or audi a6 but I'll use the BMW to illustrate my points).
And then it's not cross shopped against a M5 or even 535, it's cross shopped against a 520d touring (or possibly a 525 but not more).
If you go back about 70 pages in this thread you'll see that I tried that argument repeatedly. There are many vocal people who simply don't agree.
I think you are spot on. I love the car, but to the German in me there is no way this compares to an S class or 7 series in luxury and comfort and attention to detail.
 
This illustrates a common misconception pretty well.
I don't think the MS is cross-shopped against a BMW 7 series in europe. It's more likely cross shopped against a 5-series (or mercedes e-class or audi a6 but I'll use the BMW to illustrate my points).

In Norway it is typically cross-shopped agains cars like the VW Passat, Toyota Avensis etc. And the lower end 5-series.

I also think it really need to do a major redesign of the MS interior. New seats (Next gen seats are just ridiculously over priced), new back seat (possible to split 40-20-40, integrated arm rest, etc), proper devently designed center console, trunk space with options for 12 V power, fastening items etc, and more and more.

I partly agree but the next gen seats shouldn't be standard. Just drop the price and call them sports seats instead. I assume they are good enough, just too expensive?
Centre console, what's wrong with the add-on they have except that only piano black is available yet? Maybe make it possible to order it with the car and have it factory installed? Anyway it should be an option as not everyone wants it (seems like a small minority wants a console actually). But the price could certainly be lower. $300?
 
In Norway it is typically cross-shopped agains cars like the VW Passat, Toyota Avensis etc. And the lower end 5-series.



I partly agree but the next gen seats shouldn't be standard. Just drop the price and call them sports seats instead. I assume they are good enough, just too expensive?
Centre console, what's wrong with the add-on they have except that only piano black is available yet? Maybe make it possible to order it with the car and have it factory installed? Anyway it should be an option as not everyone wants it (seems like a small minority wants a console actually). But the price could certainly be lower. $300?
Seats: sure, call them sport seats and price accordingly ($700-800). Then add something like the bmw 5-series comfort seats at about $2500.
Center console: I have it, but compared to the center console in an audi a6 or bmw 5-series, it's more or less crap.

Also, what I didn't write earlier is that the MS on top of all this also lacks a lot of the options you can get on the bmw. (I stopped counting at 50) They range from HUD to integrated sun screens to trailer hitch to...
 
For a start, it is Mrs. Merkel. She is married you know. ;-)

Ms is not the same as Miss.

Ms is the default title for both married and unmarried women in business and politics. It is meant as respect not disrespect.

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This illustrates a common misconception pretty well.
I don't think the MS is cross-shopped against a BMW 7 series in europe. It's more likely cross shopped against a 5-series (or mercedes e-class or audi a6 but I'll use the BMW to illustrate my points).

In reality the Model S is in a class of one.

In Europe, it is classified as an F segment car. Good enough for me. That is as close as you will get to objectively classifying the car.

Model S is cross shopped from Toyota Prius to M5 and from Passat to S Class depending on the customer and particular country.

It really does not matter as long as Gen II(Model S and X) demand exceeds production capacity by 1+.

And it really does not matter if demand is from California,Norway, New Jersey,China,or Poland.


BTW By the time the 25% VAT applies to Model S in Norway and moves the Model S beyond the financial range of Norwegian budget stretchers the Model 3 will be for sale with a ~40% or more lower base price. And perhaps be perceived has having a more European appropriate size even if some think it is still too big.
 
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Seats: sure, call them sport seats and price accordingly ($700-800). Then add something like the bmw 5-series comfort seats at about $2500.
Center console: I have it, but compared to the center console in an audi a6 or bmw 5-series, it's more or less crap.

Also, what I didn't write earlier is that the MS on top of all this also lacks a lot of the options you can get on the bmw. (I stopped counting at 50) They range from HUD to integrated sun screens to trailer hitch to...
Most of the luxury options that you can get on a BMW aren't very important. If these kinds of options were particularly important, you would expect the ELR to do a lot better than the Volt, but nope, the ELR flopped.

I think Tesla is doing the right thing, competing on the areas they are good at. This is electric drivetrain technology and IT. These are the things that will allow them to perfect the Model 3, not the ability to make a ultra-luxury seat. The interior quality of the Model S is more than sufficiently developed for adaptation into the Model 3.

I do agree that some of the options are important, like the tow hitch, but Tesla is working on this stuff. AWD was more important than the tow hitch, but now that they've gotten the AWD out of the way, I think tow hitch is right around the corner: Model X towing ability
 
BTW By the time the 25% VAT applies to Model S in Norway and moves the Model S beyond the financial range of Norwegian budget stretchers the Model 3 will be for sale with a ~40% or more lower base price. And perhaps be perceived has having a more European appropriate size even if some think it is still too big.
Hopefully. We likely won't know the answer until May.

And I would say that size isn't really an issue here. You have some city-dwellers that must have small-ish cars, but for the majority of the population a Model S-sized car is fine. (Preferably in an SUV-format, even.) My biggest worry for the Model 3 in Norway is that it might be too expensive relative to it's size. The Model 3 should definitely be available as a station wagon or crossover.
 
It really does not matter as long as Gen II(Model S and X) demand exceeds production capacity by 1+.

And it really does not matter if demand is from California,Norway, New Jersey,China,or Poland.

I think that's what I also said... But maybe it was lost in my rant. ;)

So what should tesla do? As long as they are production constrained, nothing. A company that can sell all it can produce with high margin is a good thing. But when an increase in demand is wanted, they must do something.

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Hopefully. We likely won't know the answer until May.

And I would say that size isn't really an issue here. You have some city-dwellers that must have small-ish cars, but for the majority of the population a Model S-sized car is fine. (Preferably in an SUV-format, even.) My biggest worry for the Model 3 in Norway is that it might be too expensive relative to it's size. The Model 3 should definitely be available as a station wagon or crossover.
Size of the car isn't a problem in Sweden either. But after driving my previous BMW 5-series in small towns in france I won't be taking my MS there any time soon...
As for Model 3, my fear is that it will be too small.

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I think Tesla is doing the right thing, competing on the areas they are good at. This is electric drivetrain technology and IT. These are the things that will allow them to perfect the Model 3, not the ability to make a ultra-luxury seat. The interior quality of the Model S is more than sufficiently developed for adaptation into the Model 3.
In my opinion the interior of the MS (obviously except for the screen) is worse than my 2003 saab and the base price of the saab was a quarter of the MS.
I'm not talking ultra-luxury. I'm talking something I had on an entry level 5-series BMW.
 
Hopefully. We likely won't know the answer until May.

And I would say that size isn't really an issue here. You have some city-dwellers that must have small-ish cars, but for the majority of the population a Model S-sized car is fine. (Preferably in an SUV-format, even.) My biggest worry for the Model 3 in Norway is that it might be too expensive relative to it's size. The Model 3 should definitely be available as a station wagon or crossover.


A BMW 316i starts $49k in Norway but will be way underpowered vs the base Model 3.

A BMW 328i starts at $76k.

Even with transatlatic shipping I think Tesla will be ok as long as the Kroner/Euro does not collapse.

If they do then Tesla needs to manufacture in Europe ASAP.

Again a station wagon is not in the cards but a crossover(Model Y?) should appear shortly after the liftback sedan.

Do you think a full size pickup that starts at $50k in the US plus $6k shipping plus Norwegian taxes would sell in reasonable numbers in Norway? Any wealthy Norwegians with Walker Texas Ranger fantasies?