Earlier this month, Tesla claimed that Model 3 is about to become the best-selling mid-size premium sedan in the US – electric or not. While it could be there soon, it’s already there in California, where Model 3 outsold the BMW 3-Series and Mercedes C-Class to become the best-selling car in the segment during the first quarter, according to a new report based on new registrations. A few years after its launch in the US, Tesla’s Model S already took the crown in the large premium sedan segment – though there’s some controversy about considering the Model S “a large premium sedan.” Model 3 is climbing to the top of its own segment even faster as Tesla starts to produce the vehicle in higher volumes. During the first quarter, production was still fairly limited, but deliveries were mostly concentrated in California and it was enough for Tesla to take the top position. According to the California New Car Dealers Association (CNCDA), 3,723 Model 3 vehicles were registered between January and March, which pushed the vehicle to the top of what they refer to as the ‘near luxury’ segment: Models Regs. Share Tesla Model 3 3723 14.3% Mercedes C-Class 3323 12.7% BMW 3-Series 3260 12.5% Lexus ES 2024 7.8% Infiniti Q50 1944 7.4% In the second quarter, Tesla has ramped up Model 3 production, but deliveries have expanded around the US and in Canada. It’s not clear how it will affect the vehicle’s market share in California, but Tesla predicts that Model 3 is “already on the cusp of becoming the best-selling mid-sized premium sedan in the US” in its Q1 2018 shareholders’ letter released today. Tesla produced this chart of the market share in the segment over the last 6 months (roughly since the start of Model 3 production): It’s particularly interesting since Tesla generally doesn’t release deliveries per market on a monthly basis. Unsurprisingly, Model 3 deliveries in California have also made Tesla the fastest growing automakers in the state based on registrations. Here are the percentage increases during the quarter over the same period last year: A similar impact is expected in the entire country as production increases and reservation holders get their cars. Tesla has recently maintained a production rate of over 2,000 units per week and based on an email from Elon Musk to employees that we leaked last week, Tesla was on track for 3,500 Model 3 vehicles per week. The company is working toward its goal to reach 5,000 units per week at the end of the quarter in order to work through its backlog of reservations, which was still at over 450,000 reservations at the end of last quarter, according to Tesla. Here’s the full report from the California New Car Dealers Association: FTC: We use income earning auto affiliate links. More. Subscribe to Electrek on YouTube for exclusive videos and subscribe to the podcast.<doc-sep>Auto sales figures are sort of fuzzy numbers, no matter how you slice them and no matter which manufacturer you're talking about. Unless you're specifically tracking vehicle registrations, automakers generally self-report the figures. So, you have to trust that they aren't doing anything too tricky. Plus, not every sale is equal, as some are logged as dealership loaners or demo models, some go to fleets (like to a rental car agency), and still others are, of course, bought by traditional customers looking for a new daily driver.With that preamble out of the way, when we saw a tweet from Tesla claiming that the all-electric Model 3 is the best-selling midsize premium sedan in America, our interest was piqued. According to Tesla , market share of the Model 3 has just surpassed the Mercedes-Benz C-Class , which had up until now led the Audi A4 BMW 3 Series, and Lexus IS as the best-selling sedan in its class. Note that the graph from Tesla below is, we think, specific to four-door models.So, is it true? Judging by the numbers we can find, including some from Bloomberg, which has a running chart to track Model 3 registrations , the answer is... probably. We don't know exactly how many Model 3 sedans Tesla is currently cranking out, but Bloomberg estimates production at about 2,560 units per week, and total sales for 2018 at 34,414. We know the number is increasing regularly, though, and Elon Musk has said most recently production sits around 500 units per day , which, on a seven-day cycle, would be 3,500 per week.We looked up Mercedes ' sales figures for the month of May, 2018, and found that the German brand sold 5,419 C-Class models last month, for a total of 23,917 for the year (incidentally, that's down more than 30 percent from the year prior). While the bulk of those sales would surely be made up of sedans, it would also include a small percentage of coupes. Either way, it's likely that Tesla is currently producing and selling more Model 3s than Mercedes is C-Classes.Now, it's also worth considering if the C-Class is the only vehicle from Mercedes that directly competes with the Model 3. We'd guess customers may also cross-shop the CLA sedan with the Tesla, and if that's the case, you might decide it's worth adding in Mercedes' 2,527 CLA-Class sales last month and 9,622 so far for the year. The same argument could be made for certain versions of the BMW 2 and 4 Series. Still, if you're looking for a direct model-to-model comparison of sales, the Tesla Model 3 probably is the best-selling single nameplate in its class.Perhaps the most important factoid worth remembering is that Tesla has a massive backlog of Model 3 orders to work through, and even if a quarter of the 450,000 reservations back out – a number that's been reported but we can't confirm – that's a waiting line that any of Tesla's competitors would love to see at the door to its virtual showroom.Put simply, production of the Model 3 will very likely continue to ramp up, and the vehicle will indeed outsell rivals like the Audi A4, BMW 3 Series, Mercedes C-Class , and Lexus IS by the end of the year. And probably by a significant margin. That's not really news. Still, seeing its market share in a hotly contested vehicle segment pass industry stalwarts has got to feel like a victory for Tesla. And if you're waiting patiently in line for a Model 3 of your very own, confirmation that production numbers are rapidly increasing is even better.<doc-sep>It’s March 2016. Tesla Chief Executive Elon Musk is on stage for the dramatic unveiling of the Tesla Model 3. Tesla will make hundreds of thousands a year, he said. It will be fun to drive. It will be affordable. “In terms of price, of course, it’ll be $35,000,” he beamed, awash in thunderous applause. For the record: An earlier version of this story incorrectly said Tesla had not updated Tesla 3 deposit numbers since July 2017. It updated the number in an investor update on May 2. Now it’s May 2018. You can’t touch a Model 3 for under $49,000. No one’s sure when the $35,000 version will be available. Production problems have pushed delivery of the lower-priced Model 3 six to 12 months into the future, according to official estimates from Tesla, a company notorious for missing deadlines. In the meantime, the company is taking deposits and reservations now for a $78,000 version of the Model 3 that will go on sale this summer. Advertisement Musk announced the pricey “performance” version through a series of weekend tweets. In one he boasted the car will outperform the BMW M3, a low-volume luxury gasoline-powered hot rod. It’s a move that some analysts find puzzling. “Tesla was supposed to be going mainstream,” said Karl Brauer, analyst at Cox Automotive. “The whole idea was to produce a volume seller that could make them into a real automaker. If that’s your goal, why would you target an M3?” Cash would be one reason. Production problems have choked anticipated Model 3 sales, which means fewer vehicles to produce revenue that can fund operations. The $78,000 Model 3 “will provide a large profit margin” on each car it sells, said Ivan Drury, auto analyst at Edmunds. The model that Tesla sells now is rear-wheel drive, with an electric motor attached to the rear axle. The performance model will add a second motor to the front axle, giving the car more torque and horsepower. Tesla is “testing the waters,” Drury said. “If you see there’s profit to add at a much higher price point, it would make no sense not to go for it.” The $35,000 version probably will be the least popular Model 3, he said. Most automakers sell few vehicles at the base price without options, although Drury allowed that most carmakers offer their base model right out of the gate to customers who want one. “A Model 3 with a $35,000 price will be the rarest of the rare,” said Kevin Tynan, a Bloomberg Intelligence analyst. “Perhaps the second-most-collectible Tesla ever, behind the one floating around in space.” Advertisement According to Tesla, the base-model introduction is proceeding according to plan. A spokesman said the company announced in February that the base model would follow the all-wheel-drive version, expected to go on sale later this year, and that hasn’t changed. The $35,000 base model essentially will be a bare-bones Model 3 with a smaller battery — giving it a 220-mile range, versus 310 miles in pricier versions — and no other options. (The Autopilot driver assist feature, for example, is a $5,000 option.) Brauer questioned the strategy of squeezing more profit out of fewer cars. “The idea that you go to the affluent buyer to pay your bills hasn’t worked at Tesla” with the high-end Model S and Model X, he said. “I don’t know why that would work now.” Advertisement Tesla hasn’t registered an annual profit in its 14 years. Musk recently tweeted that selling the base model now would cause the company to “lose money & die.” It’s hard to say how many reservation holders have grown tired of waiting for the lower-price model and asked for refunds on their deposits. Tesla does not report those figures. The company recently said it counts 450,000 refundable $1,000 deposits for the Model 3, down slightly from last July. For some Model 3 owners, the long wait is worth it. A 68-year-old Los Angeles man who gave his name as Scott (“I don’t want the company to know I’m talking to reporters”) ordered his Model 3 in early 2016 and received it a few weeks ago — a loaded rear-wheel-drive version that cost $59,000 before incentives. He said he’s taken it back to Tesla twice to have poor-fitting body panels repaired, and continues to put up with occasional information screen blackouts that require the car to be rebooted. Advertisement Still, “I love the car,” he said. “It’s fast and agile. It’s just a wonderful car to drive.” Whether the wide variety of quality problems reported on Tesla online forums are persistent enough to affect future sales remains unknown. Consumer Reports on Monday published its Model 3 review and said it could not recommend the car. While highly impressed with the car’s driving characteristics (“handling was reminiscent of a Porsche 718 Boxster”), Consumer Reports said the Model 3 was burdened with “big flaws.” The reviewers cited poor braking performance with a stopping distance “far worse than any contemporary car we’ve tested” and possible distractions caused by the car’s unusual touch screen, which supplants almost all dashboard and steering stalk controls such as windshield wipers and air-conditioning circulation. Advertisement Bloomberg contributed to this report. russ.mitchell@latimes.com Twitter: @russ1mitchell<doc-sep>
Tesla claims that the Model 3 has surged to a dominant share of the mid-size premium sedan market in the US. Except that Tesla compares sales against compact luxury sedans. And ultimately it doesn't matter, because the Model 3 is capturing electric-car sales, not undermining market share for luxury brands. Tesla likes to tout sales of its all-electric luxury vehicles against gas-powered competition. But nobody should take Tesla seriously. And it's unlikely the company's favorite targets — BMW, Mercedes-Benz, Lexus, and Audi — are all that worried. For years, Tesla has been insisting that the Model S is a full-size luxury sedan and comparing its sales to legitimate full-size cars, such as the Mercedes S-Class. In truth, the Model S is a mid-size luxury sedan that's nowhere near as luxurious as the S-Class or other similar vehicles, such as the BMW 7-Series and the Audi A8. Now, Tesla is claiming that the Model 3 — the higher-priced Premium version, not the el-cheapo $35,000 version that the company is conspicuously not even building yet — is the US market-share leader for mid-size premium sedans ("premium" is Tesla's term, and we could use it interchangeably with "luxury," but in the car business, luxury and premium don't mean the same thing, and I suspect Tesla is aware of this). At its annual shareholder meeting on Tuesday and then in a tweet, Tesla produced this chart: Tesla So the Model 3 has rocketed to a 30% market share in its segment, against the BMW 3-Series, the Mercedes C-Class, the Audi A4, and the Lexus IS. Except that those are all compact sedans. The mid-size cars are the BMW 5-Series, the BMW E-Class, the Audi A6, and the Lexus ES. So to take just one example, the BMW 5-Series moved over 40,000 units in the US in 2017, while the Model S managed 27,000. The 7-Series, meanwhile, sold just over 9,000. Easy to beat that, and therefore the Model S is full-size! And for what it's worth, the Model 3 is also a compact sedan — but at the moment, it's priced like some mid-sizers. Confused yet? Tesla's problem with segments The BMW 5-Series. Hollis Johnson You can kind of assess Tesla's motives here. And they aren't nefarious (although for car people, they're annoying and sort of suspicious). The company only makes three vehicles and has always had a segmentation problem, so it tries to stretch its vehicles across segments. Thus the yet-to-arrive $35,000 Model 3 could match up against the base BMW 3-Series. The more expensive Model 3 takes on the 5-Series, again on price — but the 5-Series is more typically more expensive and more luxurious, and forget about the high-performance M5, which for 2018 is $20,000 more than what the high-performance Model 3 will be. And besides, the Model 3 isn't actually supposed to be a luxury car — it's supposed to be, at the base price, a car for the masses, even though that base price is kind of high (a Toyota Corolla can be had for less than $20,000). So Tesla's comparison undermines its own marketing and might make prospective Model 3 owners wonder why Tesla is picking a fight with the luxury brands in the first place. A deeper issue with the Model 3 There is also a deeper issue here: Tesla's market-share claims for Model 3 suggest that there's a competition going on when there isn't. Tesla hasn't taken market share from the so-called Tier 1 luxury brands. Rather, it's expanded the electric vehicle market and has picked up sedan share because that's all it has to sell (some might say that it's expanded the Tesla market, which was capped at about 100,000 globally due to production constraints). Whatever the established luxury brands have given up on sedans, they've restored on SUVs. And that reveals an even deeper issue, which is that Tesla is selling sedans in a declining sedan market. Its own smaller SUV, the Model Y won't show up until 2020, and in any case, the company has already missed out on three years of booming SUV sales. True, it has had the Model X. But it's also selling that vehicle at a very high price point, while BMW, Mercedes, Audi, and Lexus all have a range of cheaper offerings. I'm not the first journalist or industry observer to point this out. But Tesla ignores the argument and understandably defines market segments in ways that suit its story.