Can the Tesla Model 3 Reverse Lackluster Battery-Electric Sales?

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Survey results and sales data point to declining interest in battery-electric vehicles. Will one exciting model change opinions?

Electric vehicle sales in the U.S. are hard to call inspiring. Still struggling to reach 1% of overall sales, new models of electric vehicles of all types have sprung up for good reason. California and the EPA have mandated they must. What few saw coming was the popularity of electric vehicles that still carry a gasoline engine around to keep them out of trouble and make them practical for most owners. Plug-in hybrids and range-extended electric vehicles like the Prius Prime from Toyota and the Volt from Chevy are badly beating every affordable EV at its own game. But in a few weeks, that may all change. Or it may not.

The Tesla Model 3 will finally arrive in July according to the most recent reports by Tesla Inc. Don’t expect that to mean that you will be able to walk into a Tesla design center and order yours for immediate delivery. Like all Tesla car launches, this one is shaping up to be a drawn out apology tour for what will likely be a fantastic car.

Telsa’s newest model, the Model X, launched in September of 2015. It took four months for Tesla to sell more than ten in a month. Then it took another four months before Tesla could sell 500 in a month. It took about a year before Tesla was able to fill its pre-orders.

This time Tesla has “managed expectations” as the saying goes by announcing just how slowly it will roll out the Model 3.  First, Tesla employees will take delivery. Then, existing owners of Tesla models can queue up. Then, customers in California will get theirs. Finally, all other reservation holders, a number about five times as large as the total number of cars Tesla has sold in the U.S. since it started building them seven or so years ago will be granted access, if all goes to plan.

That may not happen until 2019.

The timing of this pivotal model may prove meaningful. J.D. Power reports that its surveys show declining interest in battery-electric cars. In a recent Mobility Disruptors* Report by J.D. Power, Chris Malott revealed that J.D. Power found 26% of new car buyers considered a battery-electric EV in 2011.  Fast-forward to 2017 with so many more options and the same group finds that only 13% of new car buyers now consider a battery-electric car.  Like the declining interest in autonomous vehicles, as the buying public learns more about EVs, interest in owning one seems to be dropping.

It is hard to question this result given that battery-electrics, meaning those with no gas engine to boost range and performance, have not grown significantly in recent years. Tesla has sold about 500 more Model S cars this year to date compared to last year in the U.S. The Model X is up by an impressive percentage but is still languishing at less than 2,000 units per month on average. Tesla hopes to sell hundreds of thousands of Model 3 cars per year.

By comparison, affordable plug-in cars with onboard gas engines are doing well and seem to be pulling away from battery-electrics. The Toyota Prius Prime has been the top-selling EV in America in two of the four months of 2017 and the Volt in one of the four.  Despite winning all the important car awards this year and being loved by reviewers, the Chevy Bolt battery-electric vehicle has not topped the EV sales charts yet. EV advocates and fans are giving the car a very hard time in fan forums for a slow release that until recently was limited to just one big market.  Sound familiar?

*Source Note: BestRide.com received express permission to use the J.D. Power information contained in this report.

 

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John Goreham

John Goreham