Will Model 3 truly be 'mass market'?

[Kevin Harney]

Tesla Motors will find buyers from a wider range of potential customers than most anticipate. By targeting the Premium market, they offer products that people aspire to own. With a bit of research, many will realize that instead of a 'some day' purchase, a Tesla can be a 'right now' acquisition, instead.

Yes I believe it will appeal to those buyers but I do not agree that it will compete with them. Meaning that I believe that it will be a more premium car with better features and better trim levels. But yes those folks will quickly find that TCO allows them to get a better car and be buying it too.

 

[Red Sage]

I doubt BMW ever sell a "base" model. A quick look at the local dealer inventory shows zero base models. Every one on the lot is full of nice expensive options which add at least 10K to the cost. Obviously the dealers make sure to never order cars without a bunch of options.
So the big question is will the Model3 still be on online order and a customer config, or stuck with the current (for everyone else) dealer order method.

All the more reason why Tesla Motors should no it adopt sales through 'independent franchised dealerships' any time soon -- if ever. Technically, it is possible to see a base version of the BMW 320i on the BMW USA website. Rots-o-ruck ordering one from a local dealer for MSRP, plus destination, sales tax, and registration fees alone. Not so with Tesla -- you will actually be able to order a base model, you just need personal discipline to manage the feat. ;-)

Do you mean the Prius is what you consider Mass Market ? ... And BMW sells about 12 K 3 & 4 series per month.

In the United States, the BMW 3-Series outsold the Toyota Prius in 2014. They are both mass market, because each was in the top twenty passenger cars for the year, reaching #16 and #20, respectively. Each moved over 100,000 units, only three cars in the top 25 passenger vehicles missed that mark.

The Tesla Model ≡ will go after BMW 3-Series because it is the sales leader in its market segment, just as the Mercedes-Benz S-Class is the perennial leader in its price range. The 3-Series also happens to be the single best selling BMW product worldwide. So if Tesla Motors can match or surpass 3-Series sales, which Lexus, Acura, Infiniti, Mercedes-Benz, AUDI, et al have been chasing for decades, within three years of the Model ≡ launch, it will make a powerful statement.

Look at it this way: If 500,000 Model ≡ are built in 2020... And 40% of them are sold in the United States... That would be 200,000 units for the domestic market. More than enough to crack the top twenty in mass market sales. I expect Tesla Motors will be rather aggressive and try to reach that level of US sales a year or two earlier than that for Generation III vehicles.

 

[TomServo]

Possibly by the time the M3 actually hits the road Tesla may not be eligible for the $7500 federal tax credit. Doesn't that bump the cheapest M3 into the low fourties and nicely optioned closer to $50K, how will that play in Peoria?

 

[Saghost]

Possibly by the time the M3 actually hits the road Tesla may not be eligible for the $7500 federal tax credit. Doesn't that bump the cheapest M3 into the low fourties and nicely optioned closer to $50K, how will that play in Peoria?

It's pretty likely that Tesla will have sold 200k cars by the time the Model 3 is out, yes - certainly if not, then in the first year of Model 3 production. What happens then is going to be all about the political situation when they get close. There's a one year phaseout of the tax credit in the current law.

During that year, there will undoubtedly be political wrangling on the subject. Depending on who is in control and how they feel, the tax credit might be extended/increased/changed to a rebate, or it might not (there was legislation to make it a $10k rebate in congress, but I think that failed.)

For all the speculating we're doing, I don't think anyone has a clue how Tesla will end up pricing the Model 3 with or without the rebate.
Walter

 

[Grendal]

For all the speculating we're doing, I don't think anyone has a clue how Tesla will end up pricing the Model 3 with or without the rebate.
Walter

We do know what Elon has been saying for the last year that it will be $35K without the tax credit. I'm sure when all is said and done that there might be some adjustment to that based on where the design ends up and inflation. You can bet they are going to try very very hard to make sure it ends up close to that number.

 

[Model 3]

... and inflation.

Remember that they earlier (2012/13?) talked about $30 "in todays dollar", and later changed that to $35k without that phrase.

 

[exLeaf]

This is very interesting discussion assuming that there will be unlimited demand for Tesla cars. I am not sure, but it appears that waiting time from ordering to delivery shorten recently indicating number of people ordering cars somehow leveled off. There are so many factors affecting demand of alternative vehicles with price of gasoline having biggest effect. So far it seems that MS was not affected by drop in gas price, however this is still low volume, highly desirable car, and I hope will be the same with MX. It seems that after introduction of 70D price of MS decreased slightly. The future of next model depends on sale of current production. T is very aggressive in increasing production level, and it is possible that 70D or whatever next version name is, it maybe in $40K to $50K range.

 

[Grendal]

This is very interesting discussion assuming that there will be unlimited demand for Tesla cars. I am not sure, but it appears that waiting time from ordering to delivery shorten recently indicating number of people ordering cars somehow leveled off.

I have seen no data to support such an assertion. This could easily be explained by the fact that Tesla is trying hard to increase production. If they have then delivery times would shorten.

There are so many factors affecting demand of alternative vehicles with price of gasoline having biggest effect.

A number of green car sites have studied the numbers and that is simply not true.

So far it seems that MS was not affected by drop in gas price, however this is still low volume, highly desirable car, and I hope will be the same with MX. It seems that after introduction of 70D price of MS decreased slightly. The future of next model depends on sale of current production. T is very aggressive in increasing production level, and it is possible that 70D or whatever next version name is, it maybe in $40K to $50K range.

?? I'm not sure what you mean by this. The Model 3 will be the lower priced vehicle. The Model S and even the Model X will adjust their pricing from time to time as changes are made or costs increase but they will always be the higher priced vehicle in the Tesla line up.

 

[aronth5]

Will it be "mass market"? The answer depends on who you're asking so there really isn't a right or wrong answer but from my perspective it won't be.
I know very few people who consider a low end BMW 3 a car for the masses so why would it be any different for Tesla?
Does anyone really think that more then 4-5% of buyers will actually spend less than $40k?

 

[Saghost]

Will it be "mass market"? The answer depends on who you're asking so there really isn't a right or wrong answer but from my perspective it won't be.
I know very few people who consider a low end BMW 3 a car for the masses so why would it be any different for Tesla?
Does anyone really think that more then 4-5% of buyers will actually spend less than $40k?

I'm not sure the $35k or $40k is what you should be looking at. For a modern EV, the proposition has always been that you spend more on the car up front, and less on fuel and maintenance for the life of the car.

I would argue that the threshold for being mass market would be when the five year TCO matches that of typical mass market cars (Chevy Cruze, Toyota Camry, Ford Fusion, VW Passat/Jetta?) - regardless of the purchase price (which is a factor in TCO of course.) I'm pretty sure that it will be solidly in the mass market by that definition.

 

[dhanson865]

I was surprised that recently Musk even commented that Model 3 would be cheaper than Bolt. That would indicate he is really set on $35k. That model will come with a steering wheel, doors and tires. But that's about it.

May be they'll pull the old trick of not offering supercharger option unless upgraded to a higher range model. That would kill the base model, just like it did with 40 kWh model.

I do not expect the base Model 3 to include Supercharging capability, just like the base Model S does not. Nothing wrong with that. The base Bolt will not include that capability, and neither will a fully optioned Bolt since GM will not have a high speed nationwide charging network anyway!
The base 3 will be much like a base S60: a great car with a usable 200 mile range, some very nice features as standard but not all the bells and whistles.

It appears both of you posted before the S70D reveal.

We also have CPO 60kWh : Supercharging standard even if used car wasn't already enabled to consider.

My take with the new lineup is that Tesla doesn't want to sell cars without supercharging enabled.

I'm saying I expect the base Model 3 to have supercharging as a standard included you can't remove it feature.

I still see people saying they don't think that is so in other threads, don't know if either of you have switched camps on that since.

 

[aronth5]

I'm not sure the $35k or $40k is what you should be looking at. For a modern EV, the proposition has always been that you spend more on the car up front, and less on fuel and maintenance for the life of the car.

I would argue that the threshold for being mass market would be when the five year TCO matches that of typical mass market cars (Chevy Cruze, Toyota Camry, Ford Fusion, VW Passat/Jetta?) - regardless of the purchase price (which is a factor in TCO of course.) I'm pretty sure that it will be solidly in the mass market by that definition.

I agree with you but not sure the mass market will until gas prices go back up. What the public will hear is that most buyers will be spending closer to $50k than $35k so it will be difficult for Tesla to battle the reputation their cars are expensive even though the TCO negates much of the initial higher cost.

 

[favo]

Of course the answer depends on the definition of "mass market." The dictionary says "the market for goods that are produced in large quantities." That is the way I've always taken Elon's and Tesla's references to it. I don't think it automatically entails "inexpensive" or "affordable by most people," although that can be a connotation.

According to Focus2Move, the top 25 cars (excluding pickup trucks) in worldwide sales for 2014 were:

Rank	Car	Sales
1	Toyota Corolla	1,262,497
2	Ford Focus	1,026,381
3	Volkswagen Golf	951,642
4	Hyundai Elantra	837,224
5	Toyota Camry	764,626
6	Wuling Hongguang	750,019
7	Honda CR-V	721,603
8	Chevrolet Cruze	709,539
9	Ford Fiesta	697,976
10	Volkswagen Polo	681,672
11	Toyota RAV4	628,294
12	Honda Civic	617,269
13	Volkswagen Jetta	614,792
14	Honda Accord	595,120
15	Volkswagen Passat	544,411
16	Buick Excelle	539,403
17	BMW 3 Series	503,761
18	Toyota Yaris	500,295
19	Volkswagen Tiguan	493,420
20	Volkswagen Lavida	486,802
21	Kia Sportage	453,839
22	Hyundai Sonata	439,314
23	Renault Clio	433,855
24	Honda Fit	428,645
25	Toyota Prius	424,236

Assuming Tesla does sell 500,000 Model 3's a year at some point, I think that would count as a mass-market car.

 

[Red Sage]

favo: Nice chart! It seems BMW has expanded production of the 3-Series. The number I had for annual worldwide sales was around 350,000. It must be very popular elsewhere, because only about 142,000 were moved in the US last year. I do wish the crossovers/SUVs were not in the list, though.

 

[favo]

favo: Nice chart! It seems BMW has expanded production of the 3-Series. The number I had for annual worldwide sales was around 350,000. It must be very popular elsewhere, because only about 142,000 were moved in the US last year. I do wish the crossovers/SUVs were not in the list, though.

Yeah, that is another point about popularity of smaller cars outside of the US. We Americans tend to forget that larger (midsize and up?) cars are less popular elsewhere, because they just aren't practical with the narrow roads, tight parking and traffic conditions the way they are. I suspect that will make the higher-end Model 3's very popular in Europe, in particular, as they will frequently be preferred over Model S.

I thought about omitting the XUV/SUVs from the list, but left them in, since there will probably be a Model 3 crossover anyhow.

 

[Red Sage]

Even if the Tesla Model ≡ is an unmitigated failure everywhere in the US outside California, Tesla Motors will sell every single one they can build for years after its release. The price of gasoline/petrol in other nations is so ridiculously high that even the equivalent of $0.50 per kWh electricity would be a relief. I am sure that Tesla wants to be successful at home, but that isn't the only path, and too many here remain eager to bar their progress.

 

[igotzzoom]

Even if the Tesla Model ≡ is an unmitigated failure everywhere in the US outside California, Tesla Motors will sell every single one they can build for years after its release.

I highly doubt that will be the case (unmitigated failure). I think the Model 3 will be a game-changer for Tesla, and the auto industry overall. The biggest issue will be retail distribution, but it could be the straw that finally breaks NADA's back.

 

[vinnie97]

Hadn't checked back in a while...this thread is like an Energizer Bunny of sorts.

Of course the answer depends on the definition of "mass market." The dictionary says "the market for goods that are produced in large quantities." That is the way I've always taken Elon's and Tesla's references to it. I don't think it automatically entails "inexpensive" or "affordable by most people," although that can be a connotation.

According to Focus2Move, the top 25 cars (excluding pickup trucks) in worldwide sales for 2014 were:

Assuming Tesla does sell 500,000 Model 3's a year at some point, I think that would count as a mass-market car.

Good sleuthing, now let's get an average SRP of those top 25 to gauge Tesla's chances of reaching that ubiquitous 500k (though this might be difficult since it was worldwide due to currency exchange, etc.; US chart would be easier to calculate).

EDIT: Found this for domestic US sales in 2015 thus far: Focus2move| USA Best Selling Vehicle - April 2015

 

[KJD]

Hadn't checked back in a while...this thread is like an Energizer Bunny of sorts.

Good sleuthing, now let's get an average SRP of those top 25 to gauge Tesla's chances of reaching that ubiquitous 500k (though this might be difficult since it was worldwide due to currency exchange, etc.; US chart would be easier to calculate).

EDIT: Found this for domestic US sales in 2015 thus far: Focus2move| USA Best Selling Vehicle - April 2015

The full year 2015 forecast is now over 17 million units. This is looking like a hell of good year for the auto industry.

How long before we have an EV in the top 100?

 

[OldSlowCuber]

The Leaf or i3 are both very range limited whereas my Honda Civic is useful for both short and long trips. The Civic has been one of Canada's top selling cars for decades - by definition, a mass market car. When Tesla says its ultimate goal is to promote the advent of sustainable transportation and that the point of the Model 3 is to be a mass market car, the price point for the base model at $35K is already higher than a fully loaded Civic. Cars like the BMW 3 Series or Audi A4 are not mass market cars but entry-level luxury cars priced beyond the scope of true mass market cars like the Civic. For EVs to be truly adopted on a mass scale, prices need to be more in line with Civics as opposed to A4s. Saying that Tesla will leave it up to other automotive manufacturers to produce affordable EVs is to render its own claims to be false.