Like a Rock: Tesla Sales, Worldwide and US, Sank in Q1
Did anybody know it was going to be this bad? Tesla sales dropped 61 percent in the US in the first quarter, 31 percent worldwide compared with the last three months of 2018. It’s not just Tesla EV sales that are soft. Somebody forgot to tell US auto buyers that EVs are the future: Fewer than 10,000 EVs not named Tesla were sold here January through March. Every time a non-Tesla EV gets sold, 405 other new cars go out the door before the next non-Tesla EV is purchased.
In the first quarter, an estimated 39,700 EVs were sold in the US: 29,900 by Tesla, 9,800 by 11 other brands. Add 21,500 plug-in hybrids such as the Toyota Prius Prime or Honda Clarity PHEV for a total of 61,700 plug-in electrified vehicles sold, or 1.5 percent of US sales.
All this points up to trouble for Tesla. As analysts, journalists, and those with Twitter accounts have said repeatedly, and Tesla keeps chugging ahead. But still, this is not just your usual week of Tesla drama. This is the worst sales drop in Tesla history. All told, 63,000 Teslas were delivered worldwide, 51,000 of them Model 3 Teslas. This was the first time in two years that Tesla sales fell compared to the previous quarter, and it was the worst one. It was several percentage points below what analysts were expected given that Tesla factories ran all out to produce, and Tesla to deliver, vehicles before the US $7,500 (maximum) tax credit for Teslas went away, replaced Jan. 1, 2019, with a $3,750 credit that goes away at the start of 2020.
Tesla also said the logistics of shifting to more international sales and deliveries meant a large number of ordered vehicles were in transit, 10,600 of them by Tesla’s count. Although Tesla has used the vehicles-in-transit argument before. Maybe that gets you wondering: When you order a 16-ounce Jamba Juice, does that count include smoothie in the straw?
The day after Tesla announced sales results, its stock dropped 8 percent and knocked $17 billion off Tesla’s market cap, or total value. But it was also a day CEO Elon Musk wound up in federal court with the Securities and Exchange Commission in New York City for mouthing off on Twitter without getting the approval of at least one responsible adult. Musk seems to be in court almost as often these days as poor Carlos Ghosn (sort of) of Nissan winds up getting re-arrested in Japan. At least Ghosn is getting frequent visitor points and free Wi-Fi with every stay.
In the US, Surprising Strength for Plug-In Hybrids
Tesla isn’t the only company in the electrified car business, just the majority player: 191,000 last year for Tesla, 170,000 for every other maker of EVs and PHEVs. The Tesla Model 3 outside the best-selling non-Tesla, Chevrolet Bolt, and Nissan Leaf, by 8-1 and 9-1 last year. If you think of Tesla as a car, not an EV, Tesla Model 3 was the best-selling premium vehicle, with 140,00 sold last year in the US versus 112,000 for the Lexus RX, and by about 2-1 over the Audi Q5, Acura RDX, Lexus NX, BMW X3, Cadillac XT5, and the Mercedes-Benz C-Class.
While purely battery electric vehicles get most of the publicity, there are significant sales in the realm of plug-in hybrid vehicles that go up to 50 miles on battery — most go 20-30 miles — before the combustion engine kicks in. EV zealots scoff at plug-ins, saying they’re not a long-term solution. But as a car for the next decade, they make lots of sense until the public charging infrastructure grows tenfold and battery power density doubles.
For the average driver, the PHEV battery gets you to work every day, and possibly home as well. When you go a longer trip, the PHEV acts like a regular car — actually, more like a regular hybrid, since the battery still regenerates power under braking or going downhill.
We’re still surprised Chevrolet ditched the Chevrolet Volt PHEV when it was among the PHEV sales leaders, third last year and even third this year, as an orphan. Production ended in February.
Among EVs, Tesla has a stranglehold on sales. Among PHEVs, there is no one with runaway market share. Sales are shared more evenly among 18 brands and about 30 models. BMW has the most models, six, plus a Mini. Mercedes-Benz has five plug-ins plus one Smart EV. Among traditional US-flagged companies, only Cadillac, Chevrolet (as long as there’s Volt inventory), and Chrysler have PHEVs.
Tesla Faces Increasing Competition
As Tesla moves downmarket — such as with the $35,000 Model 3 is — it’s going to run into more competition. At the Geneva Motor Show in March, Volkswagen’s SEAT subsidiary showed an affordable EV concept car-SUV, the Seat EL-Born. It’s important because it’s based one of the first cars based on VW’s modular MEB (that stands for Modularer E-Antriebs-Baukasten, or modular E-drive platform, or template).
The EL-Born is more important because of rumors that Seat might sell the EV for as little as the dollar equivalent of $22,400. That’s not until 2023; Seat isn’t selling in the US, and this most likely incorporates Moore’s Law-style economies between now and then. But still: That’s cheap. Could it be too cheap? It has been noted that the typical gasoline internal engine costs about $3,000. A basic 60-kWh battery pack costs at least twice as much, and batteries that size are good for around 200 miles.
The possible Seat EL-Born pricing, first reported by The Financial Times, is going to be how Volkswagen Group achieves its goal of selling 1 million EVs annual by 2025. Even if the price seems hard to achieve four years from now, it might even give Tesla some competition. Although right now, the SEAT sounds more like competition for mainstream EVs such as Nissan Leaf or Chevrolet Bolt EV.
Of more interest to the premium automaker is the midsize (193 inches) Audi e-tron SUV; the first US deliveries arrive in May. It’s has a 204-mile range — adequate if not Tesla-like — and a 150-kW charging speed, the industry’s fastest to date. Ten minutes at a public charging station adds 54 miles of range, Audi says, and 30 minutes adds 163 miles of range. The price will be about $75,000, putting it in league with the Tesla Model X and Jaguar i-Pace.