Rolling through another month of US electric car sales, I’m struck again by how much a few models dominate sales. Actually, I’m struck by how much Tesla’s two high-end (expensive) cars dominate US electric car sales.
Before I go further, I should note that Tesla’s sales numbers are not official — they are estimated based on Tesla’s quarterly sales statements, previous statements about how sales split out by region, Tesla sales figures from other regions, and varying assumptions regarding month-to-month shipments. This is why you find considerable differences in the sales estimates of different EV sales aggregators/reports. Nonetheless, the overall point is the same — Tesla accounts for a huge portion of US electric car sales. Doesn’t dozens of electric models from other automakers (most of which are much more affordable), nearly half of US electric car buyers are buying a Tesla Model S or Model X.
Looking at March figures, Tesla accounted for 45% of US electric car sales. Looking at the quarterly split is probably more reasonable, though, given shipment patterns. The result there is 38%. Either way, approximately 4 out of every 10 electric car sales are high-end Teslas, and that’s a rather shocking result — even to a Tesla fanboi.
There have been many, many discussions about why Tesla is an EV leader (or the EV leader), and why other automakers seem to be trailing so much, but I don’t recall putting all of the below factors together in one single article that tries to explain why Tesla is absolutely dominating an electric car market with only 2 models out of the 40+ that are on the market … so here we go.
1. At the core, the main issue is probably that automakers don’t want to see a swift transition to electric vehicles. They want to drag the transition out. A swift transition to electric vehicles is a financial threat to big automakers. If that premise is correct (and it seems it must be), that’s part of the explanation for the remaining points.
2. Battery supply is key to production capacity, and one known factor limiting production and thus sales of several electric car models is simply battery supply. Fully electric cars require a lot of batteries. While automakers may be working to some limited extent with battery suppliers to ramp up production for greater EV demand, Tesla is the only one that has clearly taken the reins and guided Panasonic into a gigantic joint project to ramp up battery production/supply. It’s partly Tesla’s continuous aggressive focus on ramping up battery supply that has allowed it to sell so many Model S and Model X premium electric vehicles.
3. Other production constraints? Some automakers (most automakers?) also have other production constraints for their electric models — whether it be supply constraints for other components or simply lack of capacity for these models on their production lines. I recall Ford emphasizing that it has the C-Max Energi and Fusion Energi worked into the production lines of their non-plug siblings in a way that allows them to ramp up production of these plug-in models if demand asks for it. That was something Ford emphasized as a benefit of its approach compared to the approaches of some other automakers. Indeed, Ford’s Energi models are routinely near the top of the EV sales charts. That said, however, I’ve heard of non-California dealers saying that they couldn’t get these models on their lots because California was getting them all. (Obviously, California doesn’t get all of them, and the dealer could just be making things up, but the excuse was clear — there wasn’t enough supply to share the models en masse beyond California.)
4. Range, range, range: People who buy plug-in cars want to be able to drive on electricity as much as possible, but they also want to be able to drive long distances — sometimes spontaneously — without concern about having a place to recharge. Plug-in hybrids have been an attractive transition vehicle for many, but their appeal is limited simply by the fact that they have quite limited electric range. (Note that the plug-in hybrid with the most electric range by far — the Chevy Volt — has been the best seller in this category by far.) The Chevy Bolt has arrived as the first “affordable” long-range fully electric car on the market, but it is apparently still hampered by limited production capacity, as well as the next point.
5. Superfast charging. Automakers typically hype the “fast charging” capability of their EVs (if they have the capability), but the reality is that this “fast charging” is still quite slow and is typically impractical for a genuinely long-distance trip. Furthermore, non-Tesla fast charging networks don’t adequately cover many routes drivers need to travel along (especially combined with relatively limited battery capacity/range). The Chevy Bolt is the first non-Tesla fully electric car in the US that could conceivably be a convenient road trip car, but it isn’t without superfast charging. With current fast charging, someone would basically spend about 1/3 of their trip charging (for example, a 10 hour drive would take ~15 hours). And that’s presuming there’s adequate charging capability along the route in the first place. Superfast charging is critical to many EV buyers, and only Tesla has offered it so far. Dive into this EV charging 101 for a better understanding of the different capabilities.
6. Mission is an important matter to many people buying electric cars because of climate, oil supply & national security, and health concerns. Tesla’s 100% electric, cleantech, revolutionary mission and spirit is a draw to many EV buyers. Other automakers can’t really compete here. Their business for decades has been selling gasmobiles, and many of them haven’t even been keen to sell more efficient models. They are more than happy to produce, market, and sell high-profit gass guzzlers. Consumers who despise that have been happy to shift their money over to a 100% cleantech company.
7. Brand is a related matter, but one in this case that provides a great complementary audience to the audience pulled in by the cleantech mission. Tesla has worked hard to makes its brand something that appeals to the masses — not just the people deeply concerned about climate change, oil dependency, and air pollution. Its brand is now connected to superfast cars, cool tech, the future, prestige, and strong business ethics.
Insane Ludicrous acceleration records, industry-leading Autopilot, the best infotainment screen in a car by far, over-the-air software updates, special features like falcon-wing doors and self-opening doors, Apple-like stores, and record safety scores have all contributed to this strong branding.
8. Maximized vehicles that play to the strengths of electric vehicles and minimize their downsides is another key matter. In the end, Tesla’s models don’t just compete with gas cars in their price range — they outcompete them on several key metrics. They are generally more compelling vehicles than gas cars that cost the same amount. This is why the Tesla Model S has become the top-selling car (of any kind) in its class, and I think the Model X will get there in its class as well. Part of this might be due to Tesla just doing a better job than its conventional auto counterparts, but part of it was probably also Tesla trying to do better — trying to create a fully electric car that strongly outcompete gas cars in its class. Naturally, that’s been very difficult at lower price points due to battery prices, but that’s precisely why Tesla started in the premium classes.
9. Auto dealers are clearly another bottleneck in the EV sales funnel. Much has been written about this, so I won’t say too much, but the summary points are that most auto dealers have little or no interest in selling EVs, there are actually financial reasons auto dealers would sensibly deter consumers from buying electric cars, and dealership salespeople are almost guaranteed to be ill informed about the EV models they sell and EV life. Tesla salespeople — that’s a whole different story.
Typically, expensive vehicles don’t account for a large portion of any car market (maybe they do in Liechtenstein), so it’s a bit odd on the surface to see the premium-class Model S and Model X dominating the electric car market.
Hopefully the above helps explain the EV market a bit better. Several questions remain. What will the Tesla Model 3 (and Model Y) do to this market? When will conventional automakers have EVs that don’t suffer from the issues noted or implied in the 2nd, 3rd, 4th, 5th, and maybe 8th points above? When will they create fully electric cars in the country’s most popular classes?
More thoughts on March electric car sales numbers are coming in a second article on these figures.