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Tesla Motors Inc (NASDAQ:TSLA) Model S is Crushing Premium Car Market

Tesla Motors Inc (NASDAQ:TSLA) Model S Luxury Sedan

Tesla Motors Inc is chipping away at the sales of its rivals in the luxury car space.  2015 saw the combined sales reports of premium cars in the U.S. weigh strongly in favor of the electric vehicle giant. Though Mercedes still tops the list as the best selling luxury car maker in America, Tesla is catching up fast with the Tesla Model S sedan alone.

Tesla Motors Inc (NASDAQ:TSLA) Model S Luxury Sedan

Tesla Model S dominates luxury car market

US-Luxury-Car-Sales-Tesla-570x326A number of analysts compile estimates of Tesla’s sales in the U.S. using a variety of methods. Tesla Motors does not reveal its car sales by country, so such means often need to be taken. EV Obsession estimates that Tesla Motors sold 26,566 of its Model S sedans in the U.S. alone last year. The lowest estimate sits at 24,200. Regardless, according to these figures, Tesla’s Model S outdid the BMW 6-Series, BMW 7-Series, Audi’s A7 and A8, the Porsche Panamera, the Mercedes S-Class, and every other car in its rank.

Beyond this, Mode S sales were the only sales that saw positive growth where as other car makers witnessed falls in their premium car sales. The trend played out above clearly suggests that, when compared to its gas-consuming peers, consumers are more likely to go with the EV option.

The adoption of electric cars in on the rise. It is no wonder that just about every luxury car maker either has produced or is working on producing EVs. Electric is where the automotive industry is headed. However, the big bucks lie within the mainstream market and not the premium class. While premium cars are a lucrative venture, the mass-sale of low-cost EVs stands to rake in much more revenue for Tesla.

Tesla working hard on afforable Model 3 EV

This is why Tesla Motors Inc is putting a great amount of effort toward getting its much-awaited Model 3 out on the roads. The Model 3 is set to be unveiled in March 2016, and will most likely begin delivering the vehicle in 2017. It will be Tesla’s first break into the affordable car space. Adoption trends based on the sale of the Model S and Model X just about promise that Model E will be a major success. While many have hoped that lower gas prices would push the market back to non-EVs, it is obvious now that the appeal of EVs is not just about fuel costs. This has many industry rivals upset.

“It’s been a very steady, rigorous process of disintermediation,” says Sergio Marchionne, CEO at Fiat Chrysler. Mr. Marchionne believes the rise of EVs contributes to the falling ties between vehicle makers and their suppliers.

Today, cars are almost never entirely built in-house. A whole range of components are sourced from other car makers and suppliers. With the rise of the electric vehicles, automakers will either have to redirect their resources toward building electric motors or source them from other makers.

“We won’t be manufacturing the batteries. We won’t be making the electric motors that are part of that powertrain,” the CEO warns.

The EV market does not support everyone as yet, and will most likely lead to the fall of a number of entities. However, its growth is a step in right direction. Considering that the transportation industry alone accounts for one-quarter of greenhouse gases, a move toward EVs will obviously have a huge impact. These world- and cost-saving benefits seem to be recognized by the general public and are what drive adoption. At this rate, Tesla Motors and other EV makers appear to be limited only by the price and range of their vehicles.

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