Tech Predictions 2019: Tesla Model 3 Leaves North America, and Sales Soar
The Model 3 is going abroad.
Tesla’s cheapest-ever car is going to go global. The Tesla Model 3 entered production in July 2017 and started shipping out to North American consumers, setting big sales records and surprising buyers with its quality. Inverse predicts that next year’s rollout to other continents will send sales surging as more consumers get on board.
The car sets a new standard for electric vehicles. At a starting price of $46,000, consumers receive a car with 260 miles of range, the ability to use 120-kilowatt “superchargers” that charge the car in around half an hour, a top speed of 125 mph and the necessary cameras and sensors to enable full autonomous driving at a later date. Upgrades can push the top speed to 155 mph and allow for up to 310 miles of range.
We’re reporting on 19 predictions for 2019. This is #10.
The company struggled to produce enough cars to satisfy the backlog of nearly 500,000 $1,000 reservations when production started last summer. Tesla only produced around 2,000 cars per week total at that stage. Plans to reach 5,000 Model 3s per week by December 2017 slipped back to June 2018, thanks to a misguided automation strategy. Having pushed through these growing pains in 2018, it’s time for the Model 3 to start aiming for bigger markets.
Tesla Model 3 Spreads Its Wings
Tesla plans to start taking orders for European and Chinese customers by the end of this year. From there, it expects to produce cars for Europe in significant volumes by January, and to start shipping by end of March. Cars are set to reach the Asia Pacific region by the second quarter at the latest. The United Kingdom and Australia are set to receive cars in the middle of next year.
“The effect here should be considerable,” Scott Shepard, senior research analyst at Navigant Research, tells Inverse. “The Model 3 roll-out in North America made it the fastest growing plug-in vehicle market in 2018. It’s probable that North American sales will not climb as significantly next year. Alternatively, 2019 market growth in Europe, which is already high, will probably tick-up.”
As Tesla worked through its backlog, it set huge sales figures. In the first quarter of this year, it ranked as the best-selling electric vehicle in the United States with 8,180 sales. A September report showed the car was the biggest-selling American car in the previous month, placing it fourth overall. Its success led Tesla to report a profit in the third quarter of 2018, its first since the first quarter of 2013, fueled by the Model 3 ranking as the best-selling car in the United States in terms of revenue.
It looks set to repeat this success across the Atlantic. Norwegian customers have placed over 100 million krone ($12.1 million) in deposits for the Model 3. Belgian news site Focus-WTV claims that Tesla is expected to ship 3,000 cars per week through the port of Zeebrugge on to the rest of Europe. CEO Elon Musk said during the company’s third-quarter earnings call that he expects demand for the Model 3 on the global scale to reach “probably in the order of anywhere from 500,000 to one million cars a year.”
Small Fish in a Big Pond?
That doesn’t mean success will be simple. Tesla faces big competition in some of its new markets, and China could prove a sore point in its grand plan.
“The problem that Tesla currently faces is that its vehicles are charged with a 40 percent import duty into China,” Shiv Patel, research analyst with ABI Research, tells Inverse. “As other vehicle manufactures have done, such as Volkswagen and Ford Motors, Tesla will need to partner with a local vehicle brand to successfully produce, market and sell vehicles in the country. By the time Tesla achieves this however, many brands, local and others, will have caught up in terms of technology and Chinese consumers will therefore have a wide range of electric vehicles to pick from.”
Tesla is planning to build a Gigafactory in Shanghai to avoid these tarrifs. The factory is expected to offer a capacity of 250,000 vehicles per year, a combination of Model 3 vehicles as well as the upcoming Model Y. China represents a big opportunity for the firm as the government leads a drive to electrify all cars by 2030, but the company has struggled to make inroads before as a dearth of superchargers held back purchases, pushing consumers to cheaper options like the Chevy eQ.
“China is a big market for Tesla, but China’s market is already so big that the Tesla effect on it will not be as dramatic as in North America or Europe,” says Shepard.
19 Predictions for 2019: What Inverse Thinks
Tesla’s success on its home turf suggests it’s struck gold with its promise of a more affordable yet premium electric vehicle. Sure, it still hasn’t met its promised starting price of $35,000 yet, but its high sales figures lead Inverse to predict this won’t hold Tesla back from setting sales figures soaring again as it expands its next market.
Related video: Tesla Model 3 Demonstrates “Navigate on Autopilot”