Let’s take a look at Tesla’s expanding market
Tesla (TLSA) claimed it’s expanding the market. Let’s look to see what it’s targeting. As we saw in the prior article, Tesla’s electric-only product is unique, with other luxury brands offering hybrids and mass brands offering products that don’t come with the size and features Tesla offers.
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In the recent investor presentation shown above, Tesla claims it’s expanding the market and offering the key features—acceleration, range, starting price, and effective finance cost. So let’s say you have $75,000 to spend on a car and you are super eco-conscious, willing to pay a premium for a zero-emission vehicle.
How large is this market? According to the Electric Drive Transportation Association, year-to-date 2014 electric drive market share is 3.53% in the U.S. This includes hybrids, plug-in hybrids, and battery vehicles. The U.S. market is approximately 16 million vehicles. This leads to over 500,000 hybrid, plug-in, and battery vehicles for sale in 2014 based on current estimates.
The above chart from the Electric Drive Transportation Association (the EDTA) website shows a sharp increase over the past three years. In May 2014, 6,651 plug-in vehicles sold—up 61% compared to May 2013, according to the EDTA. Including hybrids and battery vehicles, this brings the year-to-date total of 64,680 vehicles versus 6.7 million vehicles, or 3.53%. It’s becoming a significant market and it’s accelerating.
Tesla’s accelerating sales are part of this market acceleration, as Tesla delivered 25,000 vehicles from mid-2012 through year end 2013. In calendar 2013, Tesla sold 22,477 vehicles. In the context of the U.S. automobile market’s 15.5 million vehicles, Tesla has a less than 1% market share in the U.S. It’s a very small market position, considering BMW has a 2% U.S. market share. But the growth, as we can see from the chart above, is spectacular—with a 61% increase over last year. The main market participants, Toyota (TM), General Motors (GM), Volkswagen (VOW), and Ford (F), by the nature of their size, typically produce revenue increases within a range driven by national and global gross domestic product growth.