When an Electric Vehicle Outstrips Luxury Car Sales

Tesla’s electric vehicle success is creating a major disruption in the automobile industry.
Published: Fri 04 Mar 2016

Tesla has slammed the competition in the large luxury car market in 2015, according to reports. The company increased its global deliveries over 76% year on year as the Model S market share gained momentum across the world.

Tesla disrupts the EV market

In just three years after entering the US market, Tesla’s Model S became the number one selling comparably priced four-door sedan. Additionally, Model S was the only vehicle in its class with growing sales in 2015.  In Switzerland, Model S outsold the Mercedes Benz S-class, the BMW 7- Series, the Porsche Panamera and the Audi A-8 combined for the full year, and also outsold the Mercedes Benz E-Class. In Germany in the last quarter of 2015, the Model S outsold the Porsche Panamera. Finally, across all of Europe last year Model S outsold the Audi A8 and A7 combined and the BMW 7-Series and 6-Series combined.

Even Porsche agrees that Tesla is on the right track. Porsche chief Matthias Mueller had this to say at Porsche’s annual press conference in Stuttgart, Germany: “Tesla has built an exceptional car. They (Tesla) have a very pragmatic approach and set the standard, where we have to follow up now.”

Tesla electric motors have only one moving piece: the rotor. As a result, Model S acceleration is instantaneous, silent and smooth. In as little as 2.8 seconds Model S is travelling 100km/h-without a drop of gasoline. Model S is described as an evolution in automobile engineering. Tesla Model 3 is now also set to also challenge the BMW 3-series/5-series, the Audi A3/A4/A6, and the Mercedes A-Class/B-Class/C-Class. Many automobile experts believe that their Model X will also challenge the luxury SUV market.

The reasons for Tesla’s success

What’s astounding is that Tesla doesn’t have the extensive dealer network that Mercedes, BMW, and Audi have. Nor does it have their years of brand building, advertising and production capacity.  But somehow they are pulling off some pretty impressive figures.

These could be reasons for their success:

  • Battery supply chain- Tesla’s battery packs are generally cheaper than other EV batteries. This could be due to the good quality of Panasonic’s cells. Part of it could also be Tesla’s constant improvement of the packs and the battery chemistries. Scale is also a major factor. Scaling up production brings about better manufacturing efficiencies and improvements, as well as cost reductions. No other electric car company has a Gigafactory or something similar.

  • Tesla’s Supercharger network- Often, the biggest complaint is that car chargers are slow and not ubiquitous  enough. Tesla have taken it upon themselves to solve this problem by developing its own Supercharger network (or networks), and currently no other company can compare with this move. The price of these charging systems is rolled into the price of the Tesla’s vehicles. Tesla drivers receive a lifetime of free Supercharging. Tesla certainly has the upper hand when it comes to innovation and convenience for the customer.  

  • Impressive software-Tesla’s approach to software gives them a competitive edge. Its software team rolls out over-the-air updates like we get on our smartphones, tablets, and computers, continuously improving owner vehicles. Even a “recall” can be done virtually.

  • Quality reputation- When it comes to quality, Tesla’s reputation is intact.  For instance, the Tesla Roadster changed negative perceptions around the EV.   Tesla’s cheaper Model S sedan has won a number of awards of late, and after a few updates has set the record for quickest production sedan in history, with a 0 to 100km/h acceleration that beats even some supercars.

  • Customer service-Tesla takes its customer satisfaction very seriously. Its innovativeness will only attract more loyal customers in the future.

Tesla is proving that EVs can take the automobile market by storm and it’s a matter of time before the industry wakes up to Tesla’s “secret sauce”. With this awakening, we are expecting to see a lot more sales move from the traditional luxury vehicle to the EV which can be equally as luxurious and performance focused  but on a more environmentally friendly and cost effective level.