Tesla Is Giving Luxury Car Makers a Really Hard Time


Aug. 20 2019, Updated 11:51 a.m. ET

Luxury carmakers are finding it difficult to break into the EV (electric vehicle) space, which Tesla (TSLA) currently dominates. Carmakers have scaled back on their spending on internal-combustion-engine cars amid sagging sales. However, their purses are wide open for EVs and autonomous technology.

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Tesla bears

Over the years, Tesla bears have felt the company might not be able to compete with legacy automakers once they wholeheartedly get into the EV race. Legacy automakers didn’t really focus on EVs until about five years back. And at one point, Fiat Chrysler said it didn’t want people buying its EVs as it was losing money on them. Even Tesla has lost money on EVs—the company has been profitable in only three quarters over the last decade.

Legacy automakers expand their electric fleet

Meanwhile, legacy automakers have expanded their EV fleets. This expansion may have been expected to present serious competition for Tesla, but that’s not necessarily the case. According to InsideEVs, three of the top five selling EVs this year come from Tesla. The space is dominated by Tesla’s Model 3, which has accounted for a little under half of the total US EV sales this year.

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Competitors’ offerings

Positioned against the Tesla Model S and Model X are the Audi e-tron and Jaguar I-Pace. However, going by their sales numbers, the luxury cars haven’t lived up to their hype—the Model S and X are outselling competitors despite falling deliveries. According to InsideEVs, 2,513 Audi e-trons were sold in the US between April and July, averaging at 628 cars per month. Although the model is a new launch, sales peaked at 856 units in May before falling in June and July.

Jaguar I-Pace sales have been even lower. With 1,522 units sold between January and July, the model’s monthly sales have averaged at 217 units per month. They haven’t exceeded 250 units in any month this year. Furthermore, Jaguar is facing stalling sales in China.

Luring potential buyers

Meanwhile, Jaguar has set up with an incentive program to lure Tesla owners. According to Engadget, Jaguar is “offering a select group of Tesla owners $3,000 off the price of its I-Pace EV. The offer is also available to anyone who lives in a Tesla-owning household.” The discount, coupled with a dealer discount and allowance credit, would lower the Jaguar I-Pace’s base price to $54,500. In comparison, the Tesla Long Range Model X costs $84,990, or $75,315 after gas savings and incentives. The Tesla Model S costs $79,990, or $70,115 after deductions.

Buyers love Tesla

Sales figures indicate people still love Tesla, despite its higher effective prices. The cars’ driving range could be attracting buyers. Furthermore, the company is expanding its Supercharger network and has brought back free unlimited Supercharging for new Model X and S cars. However, Tesla’s post-sales service has been a point of concern for some buyers. Last week, German car rental company Nextmove ended its contract to buy additional Model 3s.


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