Tesla Motors Inc is gearing up to enter a new market, one that is eager to welcome it. With the Tesla Model 3 comes the EV firm’s long-awaited entry into the affordable car space. But EV and hybrid leaders in the mid-market are not the only ones who should be keeping an eye out for Tesla’s lowest priced car yet. Those in the luxury car space have much to be worried about as well.
Tesla Model 3 threatens car makers
Tesla Motors Inc holds a huge lead in the luxury EV market. The U.S. EV maker is said to have a billion dollar head start on anyone who would hope up to challenge it right now. Though plagued with many obstacles in its production and finances, the firm’s flagship EV, the Model S sedan, reigns supreme as America’s best selling luxury car. The gap between the Model S and its high priced rivals seems to be growing. This stems from the exclusive auto brand’s growing demand.
A common misconception is that the new EV from Tesla is aimed at buyers who might otherwise buy a Toyota Prius, Nissan Leaf or Chevy Volt. While the Tesla Model 3 does stand to lure many of those buyers to Tesla, it is in fact aimed at buyers of Audi’s A4 and BMW’s 3 Series. CEO Elon Musk relayed this himself.
The new Tesla Model 3 is expected to begin delivery sometime in the later part of next year. After the firm shared its financial earnings last week, Musk reported that the Tesla Model 3 was set to go into production on the 1st of July 2017. However, due to a setbacks within the car’s supply chain, the CEO says Tesla is likely to miss its production deadline. The news may have come as a surprise to those unused to the U.S. EV maker. On the other hand, those more familiar with Tesla and its production trends might have foreseen such circumstances.
Tesla Motors Inc is notorious for being late in delivering on its ambitious promises. The Model X SUV is but one of the few exceptions to its trend, but even that car didn’t arrive without a hitch. Bearing this, we don’t have much to support the claim that Tesla can produce a 215-mile, “5-star in all aspects” luxury EV for the initial going price $35,000, one that can deter buyers from their Audis and BMWs to boot. But research reveals that Musk’s claim may just be true. The Model 3 could only further widen the gap between Tesla and its premium car competitors.
Research by edmonds.com reveals that buyers tend to stop and have a look at a few other luxury car brand before arriving at Tesla. According to the study, Tesla buyers in March this year had considered opting for many German car brand before settling for the EV producer. For decades the premium car space has been dominated by German automotive brands. The likes of Mercedes-Benz, BMW, Audi and Porsche are just some of the luxury car makers root in the European power country.
In terms of Tesla buyers in the month of March, the most considered car maker in the EV maker’s stead was BMW. Nearly 30 percent of all Tesla buyers in that month thought of buying a BMW. 20% felt Audi might have been a the best option. 19.3% thought about a Mercedes-Benz while just over 11% leaned toward a Porsche.
But in the face of all of this, luxury car buyers went for sport and a more innovative car over traditional luxury, and Tesla was felt to be the best choice. The research conducted by Edmonds.com adds weight to Musk’s prior claims. Bearing this, luxury car buyers lean more toward the Tesla brand. This is further supported by the rise in Model S’s demand along with the new Model X.
Model 3 to eat up mid-market
Premium automakers aren’t the only one would have to beat Tesla away from its consumer base. Edmonds.com shows us that young American Vehicle maker is also eating in well into the mid-market. The same study conducted in March shows that 23 percent of Elon Musk’s consumers had though of buying a Toyota. This number is more than the 20 percent consideration given to Audi.
Honda, Ford and Lexus too were thought of a bit more than other leading premium car makers. Honda trumped Merc buyers at 19.3 percent. Ford and Lexus were though of more than Porsche. However, Tesla was eventually thought of as the better car brand.
What then could a cheaper EV do to Tesla’s demand? Well, Tesla officials claim that the the Model 3 is sitting a near 400,000 pre-orders. That’s under half a million people around the world who’ve laid down $1,000 deposits to secure themselves a concept car that is more than a year away from production. Looking at that financially, Tesla has pulled in around $400 million from the Model 3 already. It is expected that the number could rise significantly closer the car’s actual delivery.
The growing appeal of the innovative Tesla Motors Inc car brand has a lot to do with the exclusive, fun and completely revolutionary dimensions that it adds to luxury driving. Musk and his company have proven that EVs can be just as fun, if not far better, than normal cars. Bearing this, the much, much more affordable Model 3 could push Tesla to new heights.