May 27, 2017

We have got sucked up in the hype about the Tesla Model 3 and we’re all looking for Palo Alto to mature into one of the world’s leading car companies in the year ahead. But the latest data shows that Tesla is absolutely dominating the luxury car market and the Model S is still selling more than the Mercedes S Class, Porsche Panamera, BMW 7 Series and Audi A8 combined.

That isn’t just dominating the sector, it’s totally annihilating the competition and it’s doing do despite a perceived infrastructure issue facing the electric car.

Large portions of the general public are still not convinced that an electric car can serve as a daily driver. So with that in mind, it’s even more astonishing that Tesla has more than a 25% share in the premium sedan market.

The Model S has taken the S-Class’s crown

The Tesla Model S is selling more than 7000 units a quarter and that means it has left the leading names in the luxury industry trailing in its wake. The BMW 7 Series and Audi A8 were always left-field choices in the sector. But the Mercedes S-Class has been the benchmark for the sector since it launched in the 1960s.

Now has it been toppled by the most unlikely competitor: a tech start-up from California with literally no automotive heritage beyond the battery-powered Lotus Elise that was the Tesla Roadster.

Will the Model 3 reign supreme?

To have usurped the combined might of Mercedes, Porsche, Audi and BMW at this stage of the game is kind of shocking. It is also a sign of things to come. When Tesla has a clean, affordable alternative to the C-Class, BMW 3 Series and Audi A4, we could see a similar clean sweep that propels Tesla’s stock into the stratosphere and reduces the traditional automotive landscape to rubble in front of our eyes.

It may seem like an extreme prediction, but the numbers don’t lie. It has already happened once and the best indicator of future performance is past behavior. Tesla has basically demolished the luxury sector and now it has set its sights on the mainstream.

Will Model S sales slide with the Model 3 launch?

The Model S is a titanic achievement, and the launch of the Model 3 will bring a great deal of context. It could be that Model S sales slide as the Model 3 gains traction and Tesla actually eats into its own market. If a lot of customers simply wanted an electric car and they were prepared to pay the premium, then logic dictates a Model 3 will meet their needs and Model S sales will start to fall.

Now Tesla has established itself as a premium brand, though, and the Model S is a status symbol. So, while it does make sense that many owners will downgrade to a Model 3, the cheaper car could actually lead to an increase in Model S sales as more and more of society switches over to electric cars and simply want the best.

The Model S P100D is a surprise hit

Tesla was taken by surprise by the amount of people that wanted to buy the Model S P100D, a $140,000 sedan with sportscar performance and early adopters don’t seem to be dissuaded by the high price tag.

Now, of course, Tesla must contend with an onslaught of electric car launches from the likes of Audi, Jaguar, VW and Mercedes in the coming years. We’re even braced for the likes of Google and Apple going back on their word and unleashing high-tech cars that could prove a fly in Elon Musk’s ointment.

Tesla has made itself a leader

But, by simply getting the product out there, Elon Musk has established Tesla as the market leader in the EV sector. By sending the cars out on the public road, in the hands of real customers, Tesla has forced itself to find additional range, develop new battery packs and even develop an autonomous system that, right now, is streets ahead of anything else we have actually seen.

So, Tesla could well have carved itself a market niche while the other manufacturers stayed silent and developed their cars behind closed doors. It was the first, a pioneer, and that means Tesla has blossomed as a brand in the eyes of the buying public.

That should protect it, to an extent, when rival manufacturers finally get their respective shows on the road. It should also mean that the Model 3 takes a sizeable chunk out of the mainstream market. Will it be as dominant as the Model S? We actually think it might be…

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