Could the Tesla Model 3 Disrupt the UK EV Space?
Another piece of information that lent optimism to Tesla bulls came out yesterday: its Model 3 became the third-best-selling car in the UK in August.
Sept. 6 2019, Published 12:10 p.m. ET
Global EV (electric vehicle) sales fell for the first time ever in July. In Electric Car Sales Fell in July: Should Tesla Worry? we discussed that Tesla’s (TSLA) Model 3 was the highest-selling EV in the US in the first seven months of the year. This model was also the best-selling electric car in Europe from January to July. While overall EV sales declined, which was mainly the result of policy changes regarding subsidies in China, Tesla’s demand held relatively steady.
Model 3: Third best-selling car in the UK in August
Another piece of information that lent optimism to Tesla bulls came out yesterday: Tesla’s Model 3 became the third-best-selling car in the United Kingdom in August. According to the SMMT (Society of Motor Manufacturers & Traders), the Model 3 sold 2,082 units in August and came in at number three on the UK sales tally. However, the SMMT ranked Tesla in the “other” category, likely because Tesla isn’t a member.
Nonetheless, the feat is impressive given that the Model 3 bested the sales performance of the Ford Focus, which was the third-best-selling model in the United Kingdom for the first seven months of the year.
UK EV registrations surged by 378% in August
According to SMMT data, total car registrations in the UK in August declined by 1.6% YoY (year-over-year) to 92,573 units. BEV (battery electric vehicle) registrations, on the other hand, surged 377.5% during the month. BEVs’ market share also increased to a record of 3.4% in August. SMMT CEO Mike Hawes said, “August is typically the new car market’s quietest month so the huge increase in EV registrations is very visible but especially welcome. It’s great to see consumers respond to the massive industry investment made over many years.”
Tesla Model 3’s grand entry in the UK market
In a market where the uptake of EVs is rising, it’s important for Tesla to claim a sizable market share. The company has made a welcome start in that direction. Tesla started delivering its Model 3 to the UK market in late June. According to Electrek, Tesla’s sales of Model S and Model X peaked in 2017 after seeing steady growth.
The disruptive nature of the Tesla Model 3
Tesla’s Model 3 has remained a disruptor in many of the markets in which it has launched. The company first launched the Model 3 in the US in March 2016. It received over 400,000 reservations for the car in less than a month, and it was ranked the best electric car by YouTube auto reviewers. A study from Cox Automotive, reported by Teslarati, also revealed that Tesla was mainly responsible for the growth of the EV market in the US. The study revealed that 81% of car buyers who would consider acquiring an EV would consider a Tesla as their potential purchase.
EVs became mainstream in the US mainly after Tesla launched its vehicles there. Previously, most legacy automakers were manufacturing EVs only to meet zero-emissions regulations. Ford (F) and General Motors (GM), for example, were building EVs, but they weren’t expecting them to contribute anything meaningful to their bottom lines.
Tesla Model 3 to change the face of the UK EV market?
Tesla’s Model 3 could unleash the same disruptive force in the UK market, going by the sales numbers for August. The Model 3’s August sales figure of 2,802 represented about 89% of the total sales of BEVs in the UK. Investors should, however, consider the distorting impact of the reservations and the pent-up demand for the Model 3 in the country. As deliveries sped up during August after a late-June launch, the accelerated sales might be due to the clearing of the reservations backlog.
Apart from this, CleanTechnica has listed out several advantages Tesla has in the UK market. Some of these include UK consumers’ tech-savvy nature, Tesla’s existence as a premium-class alternative, and UK consumers’ environmentally conscious nature. It added, “Most ‘long trips’ on the relatively small island nation are completely covered by a Tesla’s driving range.”
Tesla’s Model 3 is also onto a major breakthrough in China through domestically-made Model 3s. Read Could Tesla’s China Gigafactory Be Its Secret Weapon? to learn more.
Tesla stock has plunged 31% year-to-date versus the S&P 500’s (SPY) rise of 19%. The stock’s decline is mainly the result of the broader market’s decline as well as its disappointing second-quarter results. In comparison, GM and Ford have gained 15.8% and 22.1%, respectively, this year as of September 5.
