Blog Tesla’s Pricier Model 3 Already Converting Owners of Mass Market Cars

Tesla noted on its earnings call Wednesday that new customers willing to shell out $50,000 for the Model 3 aren’t swapping out a luxury car in the same price range, instead they’re trading in cars that cost half as much.

Chief Executive Elon Musk said the top five cars traded for a Model 3 are the Toyota Prius, BMW 3-Series, Honda Accord, Honda Civic, and Nissan Leaf.

Each of those cars are among the most popular across categories. The Honda Civic is the best-selling compact sedan, the Accord is the second best selling mid-size sedan, the Prius is the best selling hybrid, the Nissan Leaf has been the best selling EV, and the BMW 3-series has been one of the most popular mid-size premium cars.

It’s a good sign that there’s real market demand for EVs. What’s more, consumers want style and performance and are willing to pay up for it.

Tesla’s earnings report also claimed that the Model 3 is already the best-selling premium mid-sized sedan in the U.S., a segment that includes the BMW 3-series, Audi A4, Mercedes C-class, Lexus IS, and Jaguar XE.

“In July 2018, Model 3 not only had the #1 market share position in its segment in the US, it outsold all other mid-sized premium sedans combined, accounting for 52% of the segment overall,” the report said. “The popularity of Model 3 is a true testament to the product. Based on trade-ins that we’ve received so far, we can see that the total addressable market for Model 3 is much larger than mid-sized premium sedans. We are drawing customers from many other segments, including non-premiums sedans and hatchbacks.”

 

[SkagitDoug]

So, rather than producing a pickup, why would Tesla not offer a compact car with 300+ mile range?

 

[bettegruben]

So, rather than producing a pickup, why would Tesla not offer a compact car with 300+ mile range?

 

[bettegruben]

Why would they if the 3 is selling so well in that same market? I would love to also have a pickup and get rid of the old Dodge we have to pull our boat and make runs to the dump.

 

[Pepetideo]

Why would they if the 3 is selling so well in that same market? I would love to also have a pickup and get rid of the old Dodge we have to pull our boat and make runs to the dump.

Because Tesla is a global car company and pickups only atract the US market and stands to reason they will only work on pickups when they have extra slack in production capacity

 

[Rsdavis9]

Why would they if the 3 is selling so well in that same market? I would love to also have a pickup and get rid of the old Dodge we have to pull our boat and make runs to the dump.

Me too!
4runner to pull boat and pull trailer for dump and move lots of stuff.

 

[jboy210]

Great news. Tesla has tapped into not only the market of people tired of another C class Mercedes or BMW 3 series, but also younger buyers moving up from the car they drove to work at their first job.

This weekend I was talking with a group of mid-20s about one of the group's members Model 3. Virtually every one wanted to move up to the Model 3 from their Hondas or Toyota hybrid. All of them have 4 year degrees from a great school and a couple had masters. They all felt the price was fair. And all agreed when one person said, "Why would you want to own a BMW 3 when you could own a Tesla Model 3?"

 

[John M Glennie]

So, rather than producing a pickup, why would Tesla not offer a compact car with 300+ mile range?

A Tesla pickup truck, will bury Ford, who recently has cut back on sedan manufacturing in favour of the 150, Mustang and a couple of SUVs.

 

[scottm]

As this tidal shift happens... many questions come to mind, here's some in my head:

What's going to happen with all the ICE trade-ins? Do you think there'll become a class divide between EV and ICE, as the "haves" and "have nots"... whereby using gasoline will be a sign of (relative) poverty? Those poor polluting people stuck on the fossil juice.

Are gas prices going to fall as more people leave ICE behind for good, or will consumption just shift as more people find old gas cars now to be within reach and become drivers, adding more clog to the road?

Speaking of roads, for the most part it's a tax on gasoline at the pump that pays for infrastructure improvements. What happens if that source dries up? With the generous tax credits for EV in some states be replaced by EV tax on car purchases or license plate registrations to pay for infrastructure?

 

[bmzl]

That still doesn't make the M3 a "mass market" car. It costs $54,000 to buy a M3 equipped as well as a $27,000 Accord.

 

[scottm]

I stopped by a random house for garage sale and talked to the owner, who spotted my model S.

I showed him the car.

He was seriously thinking of buying a Corvette.... dream car glitter in his eyes midlife crisis kind of thing... I could tell. Up until that moment.

His wife came over.. we talked about how well this EV has been working for me, and I basically don't have any ongoing fuel costs. Jaws dropped.

Told him we're getting a model 3 next. And that car will kick the pants off a Corvette. Similar money.

I seriously think I popped his ICE bubble and welcomed him to the next century of driving. Corvette probably not in the cards any more.

A win! And possibly another order for 3 performance. And the next day Tesla announces referrals apply to 3P, I need to get back there with a referral number

 

[Dr. J]

So, rather than producing a pickup, why would Tesla not offer a compact car with 300+ mile range?

If I understand you correctly, my guess is because it would cannibalize sales of the ~$50K Model 3. Also my guess: this is the slot the Chinese imports will fill eventually (post-trade war).

 

[SkagitDoug]

If I understand you correctly, my guess is because it would cannibalize sales of the ~$50K Model 3. Also my guess: this is the slot the Chinese imports will fill eventually (post-trade war).

Both your thoughts make sense, Dr. J, thanks!

 

[spectrum1337]

That still doesn't make the M3 a "mass market" car. It costs $54,000 to buy a M3 equipped as well as a $27,000 Accord.

Are you sure about that, especially factoring full cost of ownership?

About $1k/year in maintenance and fuel savings. $7.5k tax rebate. Resale value is also higher and if you charge to 50-80% each night (only charge full on Thursday nights for weekend prep), its very likely the battery will last as long as the car.

That's at least $36.k right there.

Does an Accord have build in audio controls for so much? Can I pre cool it? Glass roof? Huge screen? 0-60 in 5.5 - 6 seconds? 4 USB chargers?

 

[bmzl]

Are you sure about that, especially factoring full cost of ownership?

About $1k/year in maintenance and fuel savings. $7.5k tax rebate. Resale value is also higher and if you charge to 50-80% each night (only charge full on Thursday nights for weekend prep), its very likely the battery will last as long as the car.

That's at least $36.k right there.

Does an Accord have build in audio controls for so much? Can I pre cool it? Glass roof? Huge screen? 0-60 in 5.5 - 6 seconds? 4 USB chargers?

Nonetheless, $54,000 is not mass market. Moreover, I don't know where you get your $36k or your resale value; but according to Consumer Reports, the Accord is a much better car.

 

[kugasman]

So, rather than producing a pickup, why would Tesla not offer a compact car with 300+ mile range?

Because compact cars traditionally lose money. The profit margins are just too small. Traditional manufacturers can produce compact cars because they have so many other models to make up for it. I remember reading about some GM compact car program that they did in the 1980's and they knew that they would LOSE money over the entire life cycle of the car. This is why Ford and FCA are basically getting out of the car business.

 

[drPearl]

Are you sure about that, especially factoring full cost of ownership?

About $1k/year in maintenance and fuel savings. $7.5k tax rebate. Resale value is also higher and if you charge to 50-80% each night (only charge full on Thursday nights for weekend prep), its very likely the battery will last as long as the car.

That's at least $36.k right there.

Does an Accord have build in audio controls for so much? Can I pre cool it? Glass roof? Huge screen? 0-60 in 5.5 - 6 seconds? 4 USB chargers?

As soon to be owner of M3, I'm confused re your statement re charging only to 50-80%, fully charging just once weekly to make battery last longer. Is that recommended by Tesla? Haven't seen/heard of this as yet.

 

[SO16]

As this tidal shift happens... many questions come to mind, here's some in my head:

What's going to happen with all the ICE trade-ins? Do you think there'll become a class divide between EV and ICE, as the "haves" and "have nots"... whereby using gasoline will be a sign of (relative) poverty? Those poor polluting people stuck on the fossil juice.

Are gas prices going to fall as more people leave ICE behind for good, or will consumption just shift as more people find old gas cars now to be within reach and become drivers, adding more clog to the road?

Speaking of roads, for the most part it's a tax on gasoline at the pump that pays for infrastructure improvements. What happens if that source dries up? With the generous tax credits for EV in some states be replaced by EV tax on car purchases or license plate registrations to pay for infrastructure?

Michigan charges a higher registration fee to EV owners to cover the road maintenance. And there are no state incentives to buy an EV.

 

[SO16]

Because Tesla is a global car company and pickups only atract the US market and stands to reason they will only work on pickups when they have extra slack in production capacity

Even though it’s only a US market, it still is a big one. And since pickups have heavy pollution, I’m all for getting the ICE pickups off the road.

 

[SO16]

That still doesn't make the M3 a "mass market" car. It costs $54,000 to buy a M3 equipped as well as a $27,000 Accord.

It makes it a mass market if the mass market is trading up. But that does remain to be seen.