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Thread: What would worldwide Model S sales be without subsidies??

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    Member AustinPowers's Avatar
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    What would worldwide Model S sales be without subsidies??

    I don't know whether this has been asked before, but an idea got me thinking the other day:

    Model S sells best in the US, Norway, Netherlands and China. All of those are countries that (heavily) subsidize EVs, making Model S a very attractive proposition.

    In countries like Germany otoh, Model S sales are quite lacklustre, "thanks" in a large part to missing EV subsidies over here.
    That made me think, how would Model S sales look like if it weren't for those large subsidies in the aformentioned countries. Would Model S still be a big hit in Norway or the Netherlands for example? I am really curious as to what the situation would be.
    Sure, Model S is a great car. But would you have bought it if it weren't for the subsidies? In other words, would you have been in the market for it anyway?

    Perhaps some of our Norwegian or Dutch members could share some insight?

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    No subsidies in Australia, in fact the car attracts a 'luxury car tax'. This Australian Government would subsidise it if it ran on coal though. Prices start at around $100k here so it won't be a volume seller.
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    Member ToddRLockwood's Avatar
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    Quote Originally Posted by AustinPowers View Post
    I don't know whether this has been asked before, but an idea got me thinking the other day:

    Model S sells best in the US, Norway, Netherlands and China. All of those are countries that (heavily) subsidize EVs, making Model S a very attractive proposition.

    In countries like Germany otoh, Model S sales are quite lacklustre, "thanks" in a large part to missing EV subsidies over here.
    That made me think, how would Model S sales look like if it weren't for those large subsidies in the aformentioned countries. Would Model S still be a big hit in Norway or the Netherlands for example? I am really curious as to what the situation would be.
    Sure, Model S is a great car. But would you have bought it if it weren't for the subsidies? In other words, would you have been in the market for it anyway?

    Perhaps some of our Norwegian or Dutch members could share some insight?
    Technically, Tesla is not "subsidized" by the U.S. government. The income tax credits some customers can take advantage of go to the customer, not to Tesla. Would this be a deal-breaker for a car in the $75K to $125K price range? I doubt it.

    The federal tax credit program for electric vehicles was created by the U.S. Department of Energy as a way of encouraging adoption of electric transport.
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    Member AustinPowers's Avatar
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    Quote Originally Posted by ToddRLockwood View Post
    Technically, Tesla is not "subsidized" by the U.S. government. The income tax credits some customers can take advantage of go to the customer, not to Tesla. Would this be a deal-breaker for a car in the $75K to $125K price range? I doubt it.

    The federal tax credit program for electric vehicles was created by the U.S. Department of Energy as a way of encouraging adoption of electric transport.
    Ok, perhaps my wording was a little off. By subsidized I didn't mean that the company gets the money, but the customer. Which is especially true in Norway and the Netherlands. The situation might be different in the US also because Tesla is an American company, which will certainly account for some patriotic buyers who don't care about the pricetag anyway but who care about the car being "non-foreign".

    But again, I was thinking more about the situation here in Europe, as in Norway / Netherlands, as well as China, vs. countries without EV incentives, if that is a better word (I'm a non-native speaker of English after all).

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    It will be interesting to see the responses you get from those in Europe. I think Norway is the most committed country to convert people to EV's with incentives.
    As an aside, I still would have bought my car without my government incentive ($8500 ).
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    This will be a much more fair question going forward. Up until now discriminating upscale buyers used to luxury rides would find much to criticize based on the MS lack of features compared to competition. Personally, I consider them uninformed, as there is no substitute for an electric drivetrain, torque, acceleration etc., not to mention the whole alternative energy thing (but honestly, very few people really give a rat's ass what shape the world is in after they check out).

    But now Tesla is about to produce what I believe will be the most convenient, exciting and all around best production car in the history of the industry. The only critical argument left will have to do with range and charging etc. For many people, this is simply not an issue. Quite the opposite, as a full charge every morning... Well u get the pic. My expectation is that demand will be overwhelming once they hit the road, regardless of whatever subsidies are or are not in place.

    As a Sig X holder, it really makes me wonder how long I might have to wait if demand spikes for the MS. Or my wife that is. I got a MS85, which is and always will be a sweet ride, creature comforts aside. Have to admit, did miss AWD last winter. Very much hope that will not be the case this year.

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    Hard to tell. Tesla sales are still supply constrained. As Switzerland has no car industry, it is often regarded as a neutral test market. There is no support that would lower sales prices either. It is a bit early for a definite picture, but Model S sells probably a bit better than other large luxurious cars here.
    You could take as a guideline a percentage of sales of top line large cars as a first estimate. Note that size matters just as much as costs as a market limiter. If you cannot park or get out of it when parked, or after negotiating narrow roads in the mountains and around medieval cities, you might get second thoughts. From discussions with owners I have the impression that lack of features was never an important consideration in their decision. Mentioned was occasionally the absence of Mercedes type cruise control and grips to hold on to above the windows, but that was about it.

    Germany is rather atypical and has a very strong domestic brand bias for all cars. In addition about 2/3 of all cars there are bought by companies for their employees on medium term contracts. To break into that pattern will take time and will have political limits for a foreigner.
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    The economist's answer to your question is "a lower number". The demand curve of a Model S is normally sloped - greater when the ultimate cost to consumer is lower; smaller when otherwise.

    All right, you knew that already and were more interested in "by how much". We do have a small number of tools to assess that. First, in that we already have had a variety of prices, within a given market, for the vehicle, by a reasonably laborious process we could construct a Price Elasticity of Demand curve. However, only TMC can do that with anything resembling the degree of precision necessary truly to obtain that, because only they have the specific order book - we have only quarterly sales data, which incorporate a number of other uncontrollable variables, most notably shipment slop. A second tool available is the price difference amongst different markets; one can interpolate and extrapolate those data to create a curve. These data need be very carefully controlled for different buying habits, which include inter alia the kinds of parameters Alfred supplied in post #7.

    Now, to give you some sense of the relative inelasticity of the demand curve, this USA consumer purchased his Model S without taking advantage of any of the $7,500 tax rebate offered by the US government. Call it a donation to our national debt, call it naivet​e, call it what you will, but it's one datum to use.....
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    Roadster #1144 + Sig 114 dsm363's Avatar
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    What would worldwide Model S sales be without subsidies??

    What would it be if there were no oil subsidies? The number would be lower without EV subsidies but at this price range I don't think it would be a deal breaker for most.
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    I suspect that without subsidies, last year Tesla could have only sold 40,000 Model S's rather than 50,000.

    Of course, that's all moot as they were only able to manufacture 22,000 of them...
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