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So How Many 2012 Model S Electric Cars Can Tesla Really Sell?

 
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2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

2012 Tesla Model S beta vehicle, Fremont, CA, October 2011

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The 2012 Tesla Model S has launched, short drive reviews are coming in, and new owners are taking delivery every day. So what's next for Tesla?

We know what the company plans to launch for its future vehicles--the 2014 Model X crossover, a Roadster replacement, and down the road, a smaller, less expensive third model range.

But to get there, Tesla has to sell enough Model S cars to keep itself in business and generate the cash to fund those ambitious plans.

So how many Model S cars can Tesla sell?

20,000 next year?

CEO Elon Musk has said confidently, several times, that Tesla Motors [NSDQ:TSLA] will deliver 5,000 Model S cars during the balance of 2012, and as many as 20,000 in 2013.

Musk is, in fact, "highly confident" that the company will make those numbers, and turn a profit to boot next year.

And the year after, he expects the plant to build up to 30,000 electric cars, both the Model S and Model X.

Assuming a smooth production ramp-up without significant quality issues--not an automatic assumption, as Fisker can attest--the 2012 figure works out to about 800 cars a month, or 40 cars a day, five per hour, using a 20-day single-shift production month.

10,000 deposits already

And Tesla says it has more than 10,000 (refundable) deposits in hand for the Model S. So that's plausible even if only half the reservations turn into purchases; that rate may be higher.

2012 Tesla Model S display screen [Photo: Flickr user jurvetson]

2012 Tesla Model S display screen [Photo: Flickr user jurvetson]

Enlarge Photo

But 2013 could be more of a challenge. IHS Automotive analyst Rebecca Lindland, for one, is skeptical that Tesla can move that many Model S cars in the current stage of electric-car market.

Her colleague Aaron Bragman was pithier yet, calling the company's plans to sell 30,000 cars a year "folly" in a March interview.

One challenge may be simple distribution; the company now has 14 U.S. stores, versus 15 times that number for Japanese luxury brand Lexus.

Non-U.S. sales

On the other hand, next year's 20,000 goal likely includes at least some deliveries to European and perhaps Asian customers as well. Tesla is surely hard at work getting the Model S certified for sale in European Union countries and other markets.

Tesla is still selling 2012 Roadsters in Europe and Asia, but not in the U.S. It is not legally allowed to sell new Roadsters made after Dec 31, 2011, in the U.S. because the car's passenger-airbag exemption expired.

2012 Tesla Model S Signature

2012 Tesla Model S Signature

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Those non-European sales could end up being as much as 40 percent of the total of 2,600 Roadsters the company contracted with Lotus to build.

(In their comments, neither IHS Automotive analyst broke out domestic versus export sales.)

But let's say that, of that 20,000 Model S deliveries next year, fully 8,000 are sold outside the U.S. Achieving that total will depend on how quickly the company can get the Model S certified for sale in new markets.

How big is the market?

That still leaves Tesla to sell 1,000 cars per month here in the States--or more than last year's sales of the Nissan Leaf or the Chevrolet Volt.

Analysts generally expect 35,000 to 45,000 plug-in cars of all types to be sold in the U.S. this year.

2012 Tesla Model S painting process

2012 Tesla Model S painting process

Enlarge Photo

But that 2012 sales total includes such cars as the Toyota Prius Plug-in Hybrid, which isn't likely to compete directly with a 265-mile all-electric luxury sedan (or its lower-range brethren, when they hit the market).

And next year's total will include sales of Ford's two 2013 Energi plug-in hybrids as well--assuming they are launched on schedule later this year.

Competitors unclear

It's that 2013 plug-in sales number that's the big question mark. There will be far more plug-in cars on sale by then, but many will be only low-volume compliance cars sold in just a few markets.

Another open question is the competitive set for the Model S.

In his March interview, Bragman notes that annual sales of such luxury entries as the BMW 7-Series (11,299), the Mercedes-Benz S-Class (12,258), and even such high-performance models as the Porsche Panamera (6,879) form a very small segment--as do plug-in cars in general (less than 18,000 last year).

He points out as well that Tesla is a new and mostly unknown car brand with very few sales outlets indeed in, so far, just a handful of states.




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Comments (25)
  1. I think if reason played a significant role in decision making, Apple would never sell the large number of over-priced products that it does.

    So Tesla's best hope is that they are seen as the hot new thing that people feel they must have. Really, it is just a larger iPhone/iPad, so it is the obvious next step for Apple consumers.
     
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  2. +1 on the Apple analogy. Even the auto journalists who weren't completely sure the car made sense were very sure they wanted one!
     
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  3. That's why I own an android phone that is faster than the I-phone and has dual core 1.5GhZ with a true HD display 1280x720p. It has a similar pixel density to the new I-phone retina display and it was a better price too. I think Elon Musk is a pragmatist and not like a Steve Jobs who I heard could be difficult at times to work for. Elon wants to prove that an EV can be even better than a gasoline powered car and he is setting his sights on beating established gasoline cars in the price group he is marketing against unlike Detroit and the Japanese makers who say it can't be done for a similar price so we have to charge you twice as much money and driving range is the agreed upon industry standard range of 75 miles. So buy one of our gas cars
     
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  4. Great analysis as ever John.

    The question around the lower capacity cars has another angle to it: cash flow versus profit margin. The margin they make on each car is almost entirely dependent on the price they pay for the batteries, as you've said to me on twitter, $400 / kWh is the price difference for consumers.

    If they are pushing the higher capacity models it is because either:

    1. Tesla's batteries are costing less than 400 kWh so they make more money on the big range cars or;

    2. If they have a flat margin or if they even make less per large car, they're preferring cash flow now because they realise that they can only build a limited number of chassis and would rather show bigger turnover.
     
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  5. Tesla already announced the 40KWH version will be available by the end of the year, so no need for the anti Tesla sceptics to get their hopes up if it does; just delivering as promised again.

    The $400/KWH retail price indicates one can be pretty sure Tesla is already at the $250/KWH battery cost that some analyst are predicting for larger cells by 2015:

    http://www.greencarreports.com/news/1077100_are-electric-car-batteries-already-at-250-per-kwh-analyst-says-yes
     
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  6. 5000 sales in 2012 should be no problem. But 20000 in 2013, that will be a real challenge. I don't think they will be able to achieve that number based on:
    1. They have too few dealerships at this point.
    2. The car is expensive and high end which plays to a small niche market to begin with, then throw in a difiicult economy that continues to struggle.
    3. The car nor the company have proven themselves to be around for the long haul. That takes time to gain customer's trust.
    4. The competition is getting tough. Upcoming Ford Fusion Energi and Caddilac ELR will steal some sales for sure. Nobody knows if Fisker will make it, but they can sure raise money.

    I wish Tesla well , but that goal is too lofty IMHO.
     
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  7. A few things.

    The new plan is to move the gen III platform up to before the next roadster.

    20,000 is 1% of global luxury vehicle sales.

    The 40kWh battery is set to be launched in the winter of 2012 and is not based on how well the 60/85 packs sell.

    Elon mentioned in the last shareholder meeting that they only need to sell 8,000 Model S's to get into the black next year.

    Now on your question, I feel that since the car is not a compromised EV like all the others on the market you can't just look at today's plugin sales. This is a drivers car that happens to be an EV. People (driving enthusiasts) who never considered an EV will be pulled into the EV market by the handling and performance of this car after one ride.
     
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  8. Well said, John Griswell.
    Your last sentence points out the X factor that could make Tesla S sales projections possible.
    This is far more than just an EV car.
    Elon Musk clearly stated that their goal was to produce "the best car in the world". Not just the best EV!
    Can, and are they succeeding?
    Here's what Motor Trend's Frank Markus had to say in his first drive report -
    "So is it the best car in the world? ...I'd rank it among the top few percentile and at the rate these automotive greenhorns are improving things, it might well be the best car in the solar system by version 2.0 ...the dynamic performance, equipment level, and style nearly justify the price -- even if you don't care about the electric drivetrain. I don't. And I want one."
     
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  9. I agree, Tesla should make a fun sporty 4 door sedan that competes well with the other manufactures both gasoline and electric on price. It should have at least a 7 second zero to 60 and 130 mph top speed and have lots of luggage space. I would like to see it priced at $35,000 so its priced as well as the other EV's being marketed. I would like to see at least a base range of 160 miles with the option to pay a premium for more range such as 230-mile range option for $10,000 more. Since battery prices are expected to go down by 6 to 8% per year I feel Tesla should be able to do this by 2015 or so. The skateboard chassis is a great Idea since it is a blank canvas that should allow Tesla to create cars and crossover SUV's with relative ease.
     
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  10. In Tesla's favour:

    -the car is universally rave reviewed as a fantastic looking car that is a hoot to drive.
    -Once it hits the streets in large numbers people outside the alt-cars scene will realize they need to adjust their prejudices towards plug-ins
    -Oil price may be (somewhat)down now but this is the post peak oil age; there will be new record prices down the road. Even the rich don't like the idea of wasting their hard earned cash on gasoline.
    -number of stores in US will be 22 at the end of the year
    -so far Tesla delivers as promised, no need to doubt they can ramp up production as promised
    -they only need to sell 8K units/year to stay in business anyway but clearly the global market for a great car like this is a lot bigger
     
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  11. About Tesla's financial future, just combining some number floating around in cyberspace:

    The Model S was developed for a song basically, under $400 million development costs. The first 5K units will generate over $500 million in revenues in 2012 alone at a 25% profit margin. Just 5K units generating over a hundred million in profits on an investment of just $400 million sounds like good business to me.

    It gets even better when one realizes that much of the powertrain scateboard can be used for many other models for many years to come. That's what sets this industry apart from the ICE industry that needs massive investments in drivetrain development to deal with ever more stringent emission/fuel efficiency regulations.
     
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  12. The profit they make also goes directly to Tesla, not via some third party dealership. So they have much better control over how the car is sold and what image is projected, this again is much like Apple. Also current luxury cars are now not so much, as they all have lower end models so are not quite as different, Tesla is, and I think that will appeal to those who want performance and luxury.
     
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  13. I am going to put in a deposit for a 2013 Tesla S. So it would appear that we might be in the "next 20,000" after this year's initial enthusiasm orders are filled. Our requirements for an upscale family car demand at least "plug-in" technology, and at this time, the set of alternatives to the Tesla is ...zero. After now spending 16 months living with a Volt and a Leaf, electric drive technology has us hooked for both environmental and driving experience aspects.

    The potential of real travel distance with an electric powertrain makes the Tesla highly attractive, and the promise of never needing to use fuel even for trips of 200 miles, is greatly rewarding. The "fast charge" technology Tesla uses is another big plus.
     
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  14. 2 years ago I reserved a "base" signature with a refundable $5K deposit because if Tesla was able to produce the car as desribed, they would have the best car in its class and it would be electric - guilt free pleasure. Other electric cars are compromise. About a year ago I did a ride-in at the factory. Then I waited. Recently, more reviews have started to come in. About a month ago I put my name on a waiting list to get the Signature - and increased my deposit to $40,000. Tesla will reach its target sales and the company will make it because this is about a paradigm shift. Telsa proves that the best cars in the world will be electric. Their cars, their technology, their being first and their audacity will make them successful.
     
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  15. Thanks for sharing, Bill. That's exactly the kind of experience that I expect to play out numerous times.
     
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  16. I keep seeing the phrase, "Other electric cars are compromise" worded in one way or another here. I would like to know what exists anywhere that is *not* a compromise? Engineering anything means setting up some design goals that include compromises. As someone joking said to me, "fast, cheap, good: Pick any two". You can have it fast and cheap, but it won't be any good. You can have it fast and good, but it won't be cheap. YOu can have it good and cheap, but you won't get it fast (quickly). Even Tesla has to compromise somewhere. So what exactly is meant by the statement? Given the rabid attacks that EVs get from some, aren't compromises a way to build sales while minimally rocking the boat?
     
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  17. I don't think anyone has plausible data as to potential sales in its current form. One must not ignore the fact that probably very few are aware of just how expensive those battery packs are and what their lifespan might be. That subject is avoided like the plague. I'm sorry to say that Tesla is also dodging the issue of supercharging speeds by only providing times for 150 miles' worth (30 minutes). I can guarantee that those using their superchargers (which are much better than the level 3s out there) are not interested in 150 mile range increases - they are on a trip, after all. They also have refused to provide battery pack weights either, for some unknown reason. I'm beginning to wonder if Musk has some CIA experience in his background.
     
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  18. Well I have read the Motor Trend and Engaget reviews as well as Road and track review and they are all positive. The Tesla Model S makes sense since it's performance and handling are pretty much spot on for the luxury sport sedan market. At $77,500 it competes rather well with Mercedes, Audi and BMW and even higher end Lexus and Infinity models. Its performance in many ways is superior since it has 100% of its torque available from zero rpm and its computerized air suspension is both soft and firm since it is adjusted with an accelerometer and at highway speeds it lowers the car for better aerodynamics. I liked the part were the Tesla rep suggested that they drive over the bumpy stretch of road and the car had no squeaks or rattles either.
     
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  19. I feel that Tesla can succeed since the Model S is marketed well to compete against its competition whether gasoline or electric. This certainly cannot be said for the Nissan Leaf, Focus EV or Mitsubishi I. For example the Ford Focus EV is twice as expensive as the gasoline version and it only has an 80-mile range and it has similar performance since it uses a 92KW motor. The Tesla uses a 300KW motor that is equivalent to about 360Hp, and the sport signature edition makes about 400Hp equivalent. All the reviewers said that the Tesla Model S was very fast and felt like a much smaller car since it cornered with out any body roll or squeaks from its tires and suspension like a good luxury sport sedan should.
     
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  20. My predictions:

    2012 - 5000 units (Model S)
    2013 - 10,000-12,000 units (model S)
    2014 - 15,000 model S, plus 10,000 Model X

    I believe they'll be profitable in 2013 but not by much. 2014 is when I expect them to shine in terms of profitability. Beyond that, 2015 and the introduction of the cheaper ($40K) cars and cheaper batteries (hopefully) will require Tesla to really build out their dealer network, which will be very costly.
     
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  21. The posts so far do not consider the challenges of ramping up production, not just for Tesla, but also the EV component supplier base. The demand is there for EVs at relatively luxury prices - and several companies are launching new products and ramping up production volumes. If BMW, Audi, Infinity, etc all push hard on their EV plans in 2013-2014, suppliers will be challenged.
     
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  22. John - This was a good and balanced article that raises some interesting questions about the direction of the auto industry. Thank you for inviting comments.
    Q. Will Tesla sell 5,000 cars in 2012, and 20,000 cars in 2013?
    I believe the demand is certainly there to hit those numbers. If Tesla falls short in 2013, I believe it will be due to manufacturing ramp up, or delivery. Remember, I believe they are the only auto company that will deliver your new car to your house, so no need for hundreds of dealerships.
    Q. When will the entry level (160mi) car ship?
    A. Tesla has said all along that the $57K Model S will begin shipping in December 2012. Having a choice of batteries (ranges), increases the appeal and broadens the customer base.
     
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  23. In my opinion,the Tesla Model S will succeed in sales and profits for the following reasons:
    - excellent package where you get a lot of car for what you pay for. There is value for money in that car.
    - excellent styling which competes against Mercedes, BMW, Aston Martin, Jaguar, Porsche, Maserati.
    - can be used on long distance trips which negates any range anxiety excuses.
    - excellent safety features.
    - excellent luxury features.
    - excellent handling.
    - 5 adult seating plus 2 extra seats for children.
    - excellent cargo space.
    - quiet which is important on long distance trips.
    - lower cost of maintenance compared to many other cars.
    The list continues.
     
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  24. I predict Tesla hitting their sales goal this year and increasing sales after the smaller battery pack versions roll-out.
    I talk to people that want an EV but have been waiting for the Model S because of their EV range-fear or problem with the looks or size of currently available 100% electric vehicles. I personally know of two people that do plan to purchase an S and one of them has a reservation. To compare, I didn't know anyone that had reserved a Nissan LEAF when it went to market. However, I and one family member have purchased LEAF's.
    Tesla S expected reliablity is currently being based on the Nissan LEAF's and if it can meet that standard, it will capture those wait-and-see consumers after all reservations are filled.
     
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  25. I guess I am really beginning to dislike John Voelker's troll type articles. Where do these sales targets of 20k and 30k come from? Not Tesla. Tesla says 8k to 15k. So you suggest that if Tesla sells only 10k next year, they fail to meet target. False! Then you postulate that the low-end model with only 160 mile range will never be built as long as there are orders for the higher end models. Again not true. The introduction Signature series was stated from the start to be filled first, but after that it is the order received basis so if someone ordered a base model before another customer orders a higher model, his order doesn't get bumped.

    Typical strawman approach, put up false statements, then blame someone else for not achieving them.
     
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