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Are Tesla Model S Sales Dropping Due To Model 3?
JUL 7 2018 BY DOMENICK YONEY 94
Or could it be something else?
Tesla Model 3 production is finally getting up to the levels needed to start taking chunks out of a 420,000-strong pre-order list, and with CEO Elon Musk repeating his assertion that the automaker will report a profit in the 3rd quarter of this year, everything seems to be going rather swimmingly. Ok, well, apart from myriad stories recently that put the company in a bad light.
Related Tesla stories
On Forbes, however, Jim Collins, a fund manager and investment newsletter editor, is now wondering if this Model 3 success is having a negative impact on Model S sales. According to its recently released production and delivery figures for the 2nd quarter of 2018, Tesla delivered 10,930 of its full-size sedans. That’s 11.4 percent fewer than in the previous quarter, and also less than the 12,000 delivered during the previous year’s Q2. It’s Mr. Collins assertion that the decline in deliveries might be down to people choosing to buy the Model 3 instead of the Model S.
Now, we know for sure a number of people have made the opposite jump, buying a new or used Model S because of the 2-year long wait for new Model 3 orders, but is it a smaller number than those for who might think the larger car is just too big for them, or that the Model 3 is nicer? That’s probably unknowable, but it seems unlikely.
It wouldn’t surprise us if demand has softened somewhat for the Model S, though. The truth is, sales of sedans across most brands has declined in recent years and is being replaced by increased interest in crossovers and SUVs. That could be the case here as well, since we can see that Model X sales more than make up the shortfall. And, while it is true that combined, the two models are down about 3,390 units compared to the first half of 2017, the official line from Tesla is, “Our overall target for 100,000 Model S and Model X deliveries in 2018 is unchanged.“
Source: Forbes
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94 Comments on "Are Tesla Model S Sales Dropping Due To Model 3?"
Why do you even bother quoting official lines from Tesla? Is that an attempt at sarcasm? It’s like quoting official lines from the Iraqi Information Minister.
Tesla sales guidance is pretty accurate. Production guidance for new models, on the other hand…..
It’s only recently that Tesla stopped producing inaccurate guidance for the S and X, and that’s because sales flatlined some time ago, making them easy to predict. It used to be a joke.
Okay thanks for the FUD Report, TenElectrics ‼️
Flat-lined is a reference to a cardiogram showing no pulse. It’s a jingoistic term, edgy to be sure, but unfortunately, you haven’t done your homework (try http://www.dictionary.com/ ). If you look at the InsideEVs sales data for the Tesla Models X and S, you will see YoY growth in the US market. While I agree that the Model S sales between 2016 and 2017 went down, When you combine it with the full-run rate production of the Model X for the year, it has gone up. What I am seeing, however, is the Model S is not on track, for the US market, to close above 29,000 units for the year because we are now at the midpoint and they have not, in the US sold 14,500 units, they are behind by ~4000 units. If Tesla says they are on track for global numbers on established product, then, unlike in a dealership model, I am inclined to believe them. And, back to your misnomer, that means sales have not even flattened.
Does the analyst have comment about the high number of S/X units in transit?
Fewer S/X in transit this quarter than last.
Wow this Russian troll is getting upset.
Yes! You nailed it!
You’re on the wrong site SE. You belong on Bubba’s Alien Abduction and Used Tire Sale site.
Drop the second “are” in the title to make it correct English.
Fixed. Thank you.
We’ve heard this line of attack before. Many Model S buyers said they really wanted an SUV before the X went on sale, but bought the Model S while they waited for the X. Then the X came out and total sales of S and X greatly exceeded S sales alone. No problem. So we already know that Model S sales went to upsales into X’s. The results was total sales skyrocketing.
Losing some sales to up-sales of a more expensive car is a good thing.
Now, if 1 out of 20 (or whatever) folks who stretched their budget to extremes and bought an S when they really wanted a Model 3, that’s fine if they now choose to buy a Model 3 instead. Because the other 19 (or whatever) who couldn’t manage to stretch their budget will over time buy an order of magnitude more cars. So any drop in Model S sales will be replaced by an order of magnitude in more sales.
Losing some sales to grow an order of magnitude in total sales is a good thing.
Not when you can’t make a profit on the the 3, but eventually, I agree.
They can’t profit on the $35k unit today, which is why they are profiting on the $48k and above price points, and I expect they will meet guidance on net positive cash flow by Q2 or Q3 of this year. They were very clear that they would profit once a certain run rate was attained later this year. Now… GM has publicly admitted that they lose $9,000 per unit on the GM Bolt EV, yet make up for that in ZEV credit accounting magic. Perhaps that loss has gone down for GM, but Tesla is running things differently.
What I hope Tesla does is stop selling their ZEV credits. Not because I don’t want them to make the free money, but because it forces other labels to put more spirit into making EVs. And that’s why we are all together here at InsideEVs. Except for those who aren’t. That would make for a whole lot more Chrysler Pacifica PHEVs, etc. Until they go full electric, and leave ICE products in the dust like that VW did in the Pike’s Peak rally.
OK. Now, comparing cost of BMW and Tesla, model vs. model start comparing TCO. How much more gasoline has to buy BMW 5 owner used for the same distance traveled compared to BMW 3 owner? How much more expensive is service?
The difference between Teslas is minimal.
After you are done with this calculation (use 100 k miles) please post it here.
Some truth to this.
Not sure there is a “much greater preference” for the smaller cheaper car compared to BMW. What is the 3 series to 5 series ratio for BMW – 10:1? I don’t know but that seems about right.
The 75% more number is dubious. Today I can place an order for a Model 3 and pay $53k by memory for an AWD and I would pay $75k for an S. Autopilot costs the same so if I plug that in it is $58k and $80k. Interestingly 37% is the calculation there and that is awfully close to 35% for BMW.
Now I am not saying that math is perfect either but the option check boxes are just not the same as BMWs. You can’t get 2 screens or air suspension on the 3. Last time I got a BMW, I paid $5k for 7 series seats on a 5 series. That just isn’t an option with Tesla.
There have been times when the 3 series was newer than the 5 series and it was a proportionally better value.
Then there is the Tax credit timing. That can’t be ignored.
As Steve Jobs used to say: “if you don’t cannibalize yourself, someone else will”
Skyrocketing? Uh, no. The X and S have been flat for 6 quarters. ALL the growth is in the Model 3– and thus the “Osborne Effect” is fully in play.
I still think the sweet spot is a USED Model S, with Supercharging For Life.
I definitely think the Model 3 and Model S have some cross-shoppers. And so, sales from one might affect the other. However, there are a million factors to take into account. For example, the Model-3 roll out probably provides good advertisement for Tesla as a brand, thus causing more sales of S and X.
Tesla has been saying that they’ve had record demand for the Model S+X for four quarters straight. This article has a definite answer and it’s in the production reports.
Q1:
“Net orders for Model S and X were at an all-time Q1 record, and demand remains very strong.”
Q2:
“Both orders and deliveries for Model S and X were higher in Q2 than a year ago. Our overall target for 100,000 Model S and Model X deliveries in 2018 is unchanged.”
I see author found the second sentence in the last quote for this article, but should also note the sentence before it. Also note that the Model S+X are built on the same line, which has a limited capacity. Parsing between the Model S or Model X deliveries separately doesn’t amount to a hill of beans when they have made clear that demand for both is higher than last year. If deliveries are lower than last year, then it follows that supply and demand are not equivalent.
That it’s an almost 9 year old design probably doesn’t help either
Model S is just 7 years old now(2012 – 2018), but so so many rather major updates, aesthetically and technology-wise, it’s still a fantastic car. I just hope the next gen goes a bit less minimalistic with the interior.
If it was a choice between an older S before the new cameras, and a new 3, I would pick the 3. But if I could swing the current 2018 Model S, I would do it in a heartbeat.
The Model S prototype was unveiled nine years ago. It’s relatively unchanged from that. They spent the next two years trying to produce it.
And yet 9 years later, not a single other car maker currently has a Model S competitor for sale in the market.
A decade of failure to compete.
Can you imagine if GM had waited until 1975 to bring out the Camaro in response to the Ford Mustang?
But thanks for reminding us that all the other car makers had 2 years to beat the Model S to the market with a superior EV. Not only did they fail to execute in those 2 years, they have continued to execute year after year after year since then.
For most of the large makers a model S competitor doesn’t make sense. Sedans are losing sales faster than EV’s are growing, especially large sedans. And the model X really isn’t a competitor to an SUV. It has power and performance, but your not going to load up the family and drive 1k miles in it or pull a camper/boat any real distance. It’s a nice vehicle, but I normally see them dropping off kids at school.
lol, sure, the sedan, the Model 3 will be pooled into that category……..a SEDAN with over 400k wait list.
no, the dumb legacy companies failed to make a compelling car/sedan.
TeslaXCanada towed a trailer from the west coast of Canada to the east coast, down to Florida, across to California and back to Canada, but hey, realize you didn’t know that.
> It’s a nice vehicle, but I normally see them dropping off kids at school.
So, just like every other SUV ever sold.
Exactly. SUVs are people haulers. Just like the Model X and a minivan.
No need to compete with Model S, its an overall dying market.
“The Model S prototype was unveiled nine years ago. ”
Now you’re counting prototypes in as a model year?????
You’e A GOD DAMN IDIOT!!!!
And you are very rude.
Model S is getting a bit “long in the tooth”. Actually though the current Model s is much higher quality then they used to be…
David:
“the current Model s is much higher quality then they used to be…”
Perhaps that is because it was such poor quality previously.
No, it’s because of continuous improvement via OTA updates, something LICE manufacturers can’t do.
OTA does not fix the terrible build quality and mountain of rattles.
https://www.youtube.com/watch?v=dKQPHC4JyAU&t=17s
Please stop yourself. My model s hasn’t any rattles at all, nor does any of the 3 loaners I’ve had when my car was in for annual service, the last 2.5 years. It’s not even a sedan as people say it’s a liftback. The car is much better than when it was new and is still improving due to ota updates. Huge performance upgrade of the mcu lately.
Same here. Owning Model S in Europe since 1.5 year – had not a SINGLE issue with the car. Best car I EVER had (and I owned series of high end cars).
But I agree that material quality and sense for details could be better, that’s simply not comparable with German premium brands. I gladly accept that for driving without emitting anything, however.
EDIT: Should be reaction to Rasmus.
Absolutely agree… It was horrible on release. I test drove it and went… Love the powertrain, but hate the car… I looked at my buddy and said imagine that drivetrain under a Mercedes S, we both said wow, that would be awesome, and cancelled our orders.
You’re so full of sh.t. Always relying on old facts. 90 percent of what you write is untrue.
As has been reported several times, Tesla (or rather Elon Musk) said, several months ago, that they were reducing MS/MX production by 10%, to concentrate resources and Tesla engineers on Model 3 production. So if MS sales/deliveries are off 11% from last year, that’s pretty close to what was planned.
But more currently: I thought Steven Loveday commented just the other day that MS/MX production or deliveries appeared to be headed back up. So I’d very much like to see him comment on this article.
Or sales were down 10% already, and they spun it. The amount of unsold S and X inventory on the market has increased quite a bit of late.
People like you who don’t follow Tesla get confused so easily. Tesla stated they were changing deliveries weeks ago to prevent deliveries strain from end of the quarter pushes. Obviously this, and forestalling hitting 200k u.s. deliveries is going to have a one time hit on deliveries this quarter. Production is steadily 100k/year SX combined and sales will follow.
Currently there are exactly zero Model S or Model X inventory cars for sale in the entire United States. What percent increase in inventory do you believe that represents? Please show your math….
https://ev-cpo.com/classic/
I get emails about inventory at the end of every month and qtr when Tesla is trying to sell loaners and test drive cars.
Eleventy Pretend Electrics said:
“…they spun it.”
Perhaps if you were not so used to saying things which aren’t true, then you wouldn’t be so quick to accuse others of that.
“The amount of unsold S and X inventory on the market has increased quite a bit of late.”
Maybe on Bizarro Planet FUD, it has. Not in the real world.
Believe it or not, some people still prefer a more efficient and elegant car over domesticated tank.
But there is that simple fact that SUVs are terribly inefficient. My 8 yo does fine getting out of back seat. But I do agree that there is some truth to the fact that the small sedan market is bigger than the large sedan market.
The suspension and ride of the model S is wonderful and completely unlike the Model 3. It is astonishingly solid, yet smooth. The ride of the 3 is far edgier, lighter, more sporty, less luxurious. I have the Model S. Yes, I wish it were smaller, but otherwise it feels like it’s in a different league of luxury than the Model 3. I prefer it.
I did notice that for the first time, Model X deliveries were higher than the S. But with the rave reviews the Model 3 is getting, it’s no wonder some people like to save a few dollars and opt for a 3 instead of an S.
Maybe, when the word-of-mouth of all those Model 3’s does its work, sales of the S might be rebounding.
Or maybe its all a fluke due to less production because of the focus on the Model 3. Let’s see what the Q3 numbers bring.
I am reminded of a thought by Elon talking about the Model X some time back, as being the vehicle that would carry Tesla Forward, exactly due do general trends to SUV’s, and he said then that he expected X sales to outstrip S sales, much sooner than this past Quarter!
So, all this talk of dropping Model S sales, as if it was a leading indicator of the death of Tesla is funny, and a bit contrived!
In Europa half of them were sold in Netherlands and Norway where they give major incentives:
https://teslamotorsclub.com/tmc/threads/tesla-europe-registration-stats.61651/
So who’s gonna buy that crap without incentives?
Speaking of crap that nobody is buying… try dialing back on the FUD.
He’s just whining little bitch, I wonder why that kinda people spend their time here.
Sometimes one has to face facts. The S needs a refresh. The M3, according to those who have one, is a great car. Quick, responsive, faster than the specs. If it’s as good as new owners rave, there’s not enough difference between the M3 and MS to justify the cost difference in many peoples’ minds. The MS is a fantastic car, but needs more goodies to justify the higher cost. Better range and a cabin filled with more creature comforts would do it, again just my opinion.
Model S already got refresh and evolved over the years, including some reliability improvement. It is just big and heavy, you can’t easily add more range at reasonable cost.
The problem is that full size sedan market is shrinking in the US, and never was substantial in crowded cities in the rest of the world. Now when you have more choices, TM3 is (hopefully) going out of circus tent state soon, i-Pace already for sale in some markets, new e-Tron around the corner, many economy offerings, Nexo, etc. – there are much less reasons to try to rationalize purchase of old-fashioned and very expensive full size sedan that too often doesn’t fit into available space.
There is absolutely no reason for any large range than current Model S 100D has. What for? You just drag unnecessary load with you for every single trip. Superchargers are available “almost” everywhere now and counting.
Try to google little bit for EV range studies, there is no reason for more than 300 miles range IF fast charging is viable.
Really? Panasonic is getting rid of other customers, so that its survival will depend on Tesla alone?
Tesla have said this year they are production constrained on the panasonic 18650 cells for Model S+X and 100,000 is all they can produce. Unless they are lying about that they are in a position of needing to balance a bunch of factors when deciding wihich orders ship when. It could be the case that Model X demand is taking over and maybe demand for S as plateued in somewhere like Claifornia but talking about any sort of sales peak for model S is a pointless conversation. They have dozens of markets to enter and when they get a point they are ready to produce more they will sell more. Mercedes S Class sells 100,000+ a year. Model S will do the same once they have a couple more factories.
I know I’m old school, but back in my auto racing days ( 1970’s thru 1980’s) and CNC machine tools (1980s thru 1990’s) Our engineering team(s) always had a saying “form follows function, but it does follow” I think Tesla gets that with the model 3, but I think they learned some hard lessons in that vein on the S and X.
This honestly is not a negative comment. Anybody who designs stuff knows one the hardest things to do is to start out with a blank piece a paper.
When you doodle something that looks cool and then figure out how to make it work, it’s backwards from the way you should design stuff. Thats also how all your stuff starts looking the same.
Many people waiting for Audi E-Tron, Jaguar I-Pace or Porsche Taycan.
Much better EV are on the horizon, better not waste your money on bad American made car made in tents in some desert.
If you think getting your hands on a Model 3 is tough, wait until you try and get a car that they are only planning on making 20k a year of for the entire world market.
Bingo. Depressingly enough, I think the iPace, EQ, and Etron are only being released to show that they have something and to string buyers along. They won’t be produced in any reasonable numbers.
Yeah but nobody’s been lying about a $35k e-Tron coming to market real soon.
For Porsche, 20k is a decent annual model volume in the first year. Same for one of the most expensive models from Audi.
And for Jaguar, it’s going to be about making as many as they can, but unlike Tesla they have enough brains to understand it’s better to underpromise and overdeliver. In Norway, ten times as many Jaguars will be delivered in Q4 2018 as in all of 2017. That’s largely because Jaguar sold almost no cars at all last year – and that’s their situation in most markets. They’re a small niche brand with suddenly one of the most talked about and most desired new cars on their hands.
Last time I checked, Fremont was not “in the desert”…cultural desert, maybe. One tent, singular, and really a Sprung Structure, which can become permanent if Tesla so desires.
Do some research next time…Google is your friend.
You seem to have pressed a sore spot, looking at the downvotes.
But while your tone is a little provocative, there’s no doubt Model S is getting competition now.
Given Teslas situation and claimed ability to make as much margin on Model 3 as on the S, et don’t they just make fewer S and many more Model 3?
Article question: “Are Tesla Model S Sales Dropping Due To Model 3?”
————-
+ 220 q/q is “Dropping”?
2018-Q1:
Jan: 800
Feb:1125
Mar: 3375
————-
Total: 5,300
2018-Q2:
April: 1250
May: 1520
Jun: 2750
————
Total: 5,520
source: https://insideevs.com/monthly-plug-in-sales-scorecard/
Numbers can be looked at many ways. Year over Year (1st Half) the units dropped. But still Q2 is higher no matter how you slice it.
Q1, 2017 = 6,100 2018 = 5,300 (-800)
Q2, 2017 = 5,095 2018 = 5,520 (+425)
1st H, 2017 = 11,195
1st H, 2018 = 10,820 (-375)
The post speaks of global numbers, while our Monthly Sales Charts are U.S. figures.
@Domenick Yoney said: “The post speaks of global numbers…”
——————
Model S global:
2017-Q1: 13,450
2017-Q2: 12,000
———————
Total: 25,450
2018-Q1: 11,730
2018-Q2: 10,930
———————
Total: 22,660
Delta: -2,790
… Hong Kong?
Year over year. Says so in the text.
I checked out the used Model S inventory on Tesla’s site the other day, and was surprised to see some reasonable prices, even for dual motor variants. Maybe lots of people trading in their Model S for a Model 3? Makes me think about getting a used Model S, but then I see videos for how to repair broken, over complicated door handles, and think maybe I’ll pass.
However, if you get a low enough price repairing a couple of door handles for $1,000 each won’t be that big a deal. I bought a 2013 S85 from Tesla a year ago right when prices bottomed out. Motor had already had the fix, two of the door handles had also been fixed. For the price of $43,500 and lower cost to insure a car that is a bit older I can afford to have a couple of expensive repairs and still come out way ahead. Of course, that was when they were still offering the 2 year warranty on used cars. Since I don’t care to do everything on the touch screen model 3 was low on my list.
Well, Tesla increased production of the Model S from 2012 to 2015, and at some point introduced the option to lease the car. The three year leases of early 2015 now show up as inventory. Hard to say if there was a switch to buy a model 3 (no lease options) or to lease another Model S or X.
In any case, they will all be sold to someone who wants a Tesla now but can’t afford a new one and likely replace an ICE car.
About halfway in the second half of 2018 (September/October) global cumulative total of Tesla Model S deliveries will reach the 250,000 Milestone.
It would be nice if InsideEV’s would soon publish an article about this nearly to be reached Tesla Milestone. And please also add a graph showing the annual build-up of this 250,000 Milestone.
Thanks
Model S sales peaked in Q4 2015. They’ve been declining, albeit noisily, ever since.
A rare case where the headline is a question, and the answer is “YES.”
When there was only the Model S, Model S sales were massive. Now that there is a Model X and Model 3, what do you expect?
If the Model 3 had been available when I got my Model S in 2013… I would have gotten the Model 3.
I bet the BMW 3-series decimates sales of their own 7-series.
In the case of Tesla… they make more cars every year. They’re tracking to make 200,000 cars this year!
Since Model 3 was released, the Model S interior has started to look a little long in the tooth. They should update the S interior to be more inline with the minimalist style of the Model 3. Also, they should consider raising the stance and roofline up a bit to give it more of a crossover feel.
That would reduce efficiency (i.e. range). People who want a higher one can get a Model X…
There are going to be a lot of model3’s running around over the next few years. The model3 performance model will be the ultimate boy racer machine. I wonder if the model3 might affect a change in fashion back towards sedans? People like to be on the next thing and atm SUV’s are as common as dog s…
You would expect S sales to start declining and some to defect to model3. But I’m sure there is a major overhaul coming on the S sooner rather than later to keep the S ahead of coming prestige EV .
Tesla’s share of pure EV US sales just keeps going up and up. So far this year 2 out of every 3 pure EV’s sold in the US are Tesla’s, with Tesla taking the top 3 sales slots for BEV’s.
It cracks me up when people start getting verklempt over their concerns for Tesla EV sales, when Tesla is the head and shoulders clear US pure EV sales leader.
I favor the “sedan decline” theory. The article below shows that in March 2018 all sedan sale figures – apart from those of the Malibu – shrunk comparing to March 2017, most by double-digits %%.
https://www.motortrend.com/news/midsize-sedan-sales-toyota-camry-leads-in-a-declining-segment/
Model 3 is a sedan. Model S is a hatchback. But yeah, let’s assume whatever sounds good for Tesla…
Couldn’t it be as simple as Tesla, in an effort to make it look as if they can now make 5k M3 per week, using all available resources (personnel) to make M3?
I think it makes more sense to worry about production, quality, and servicing.
As for me, I bought the KONA yesterday. It’s a long wait, but I pretty much take it for granted they’ll deliver in Q2, 2019 as estimated. Tesla in fact estimates “early 2019” for my Model 3, but somehow in their case I don’t trust I could get it anytime in 2019 at all! In fact, I’m not even sure a base, $35k Model 3 will be available in Norway any time before, say, 2022. Personally, I think that says a lot of the maturity stage Tesla is still at.
The main difference between S & 3 is max number of seats. And for 7 the only real option is an X.
So I don’t see too many people willing to pay tens of thousands more just to get a few fractions of a second extra acceleration that really isn’t necessary given electrics are nippy by default.
Tesla will need to differentiate on range to justify the S going forward I reckon.
Who cares? They are both overpriced!
Surely they will eventually switch the Model S to the Model 3 battery tech and this will likely increase the range and decrease the price of the Model S. Greatly improving sales again.