Will Too Many Tesla Buyers Make the Switch?

Steph Willems
by Steph Willems
will too many tesla buyers make the switch

In a recent earnings report that, unlike Nissan’s, actually pleased investors, Tesla claimed its new Model Y crossover would see its first U.S. deliveries in March of this year. Great news for antsy reservation holders, but some worry the appearance of America’s Favourite Bodystyle will have a harmful impact on the automaker’s current best-seller, the Model 3.

Bernstein analyst Toni Sacconaghi wrote in a note to investors Tuesday that the Model Y could end up cannibalizing Model 3 sales, which is hardly a far-fetched proposition.

Many Tesla intenders will look at what they have to spend, size up their needs, and choose the Model Y over the Model 3, as shelling out nearly double the cash for a Model X surely isn’t in the cards. The question is, just how many will make the switch?

Sacconaghi writes that “any softness in Model 3 sales or orders domestically or in Europe could ultimately spook investors near-to-medium term,” thus sending the company’s stock onto the downhill leg of a recently lofty journey.

While the Model Y boasts more interior volume than its sedan counterpart, Sacconaghi said “a striking physical similarity” exists between the two, blurring the usually well-defined boundary between models.

New Street Research analyst Pierre Ferragu agrees, stating in a research note that, “Currently, 20% of Model 3 trade-ins in the U.S. are SUVs. We expect the launch of Model Y to cannibalize Model 3 sales by that order of magnitude.”

All that said, China could step in to solve the problem before it even materializes.

“The ramp on the domestically manufactured Model 3 in China over the course of 2020 could ultimately neutralize the impact on the global Model 3 volumes,” Sacconaghi wrote.

Tesla recently idled its new Shanghai assembly plant to combat the spread of novel coronavirus, just a month after making the first deliveries of a domestically produced Model 3. The automaker anticipated a delay in deliveries stemming from the shutdown. As of Monday, however, the facility is back up and running.

[Sources: Barron’s, Markets Insider] [Image: Tesla]

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3 of 14 comments
  • Cprescott Cprescott on Feb 13, 2020

    The thing they call "Y" should be called "Model Egg" - because that is egg-zackly what it looks like. If that qualifies for a CUV or SUV then my real name is Edna.

  • SCE to AUX SCE to AUX on Feb 13, 2020

    One reason TSLA recently shot up is because of the production of the Model Y, not in spite of it. This shouldn't be news to anyone, especially investors. Tesla has long predicted that the Model Y would be its best seller, on the heels of its current best seller. Leave it to TTAC to paint this as ominous news, in which a car company delivers another product people want to buy.

    • Hummer Hummer on Feb 13, 2020

      I feel like you could lift the Model 3 by 2 inches, put slightly meatier tires to fill in the wheel well void and change the badge and no one would ever know it wasn’t a Y

  • Tassos SNAAB shot itself in the foot when it BASTARDIZED its unique brand by BADGE ENGINEERING its vehicles with GOD DAMNED GM, OPEL, CHEVY, LANCIA and who knows what other automotive RIFF RAFF. I know of no Saab Enthusiast (they do exist) who felt sorry when the stupid maker went BANKRUPT.
  • 28-Cars-Later Example is located in Coldwater Michigan, so..." needs work -- including new brakes."Brakes, brake lines, probably fuel lines. Probably should hit the master cylinder too unless there are seal only kits for it."It has an automatic transmission."Likely needs a new one of those as well."an exhaust leak"Add an exhaust to the list."an inaccurate speedo."Wow and TMU to boot!These days five to six bills isn't too horrible but this example could turn into a headache really quick due to parts availability. The right buyer for this is a small time tradesman, the HVAC guy who was just leaving my house is rolling a late P80 Volvo 850 sedan in manual which he treats like a truck. Said he'd love a wagon if he ever came across one... if you're local to Coldwater Michigan this is a nice work beater. Annual inspection/registration tax probably costs nearly as much as the car.
  • 2ACL Amazing price, but that's (IMO) a reflection of the interest in an old 2.0T repmobile made interesting only by being a wagon. The Epsilon 9-3 was a sanitized take on the Saab formula. That's not to say it lacks interesting variants, but this isn't one of them. If it had a stick, maybe. But this generation's automatics are sealed and known to become temperamental if not serviced. If the owner can't provide proof of regular servicing, run.
  • Tassos The 3 lt turbodiesel should be FAR, FAR more efficient than the 6.2. ANything that walks would be more efficient than the 6.2. Are you kidding me?The 3 lt turbodiesel in my 4,000 lb+, 208 HP, 400+ LBFT E320 Bluetecs is more efficient than even the 2.2 lt ICE with its meager 125 HP in my 1990, only 2,822 lbs, Accord Coupe 5 speed LX. 100%. I have the full detailed records to prove it beyond any doubt. I consistently get over 35 MPG HWY, which I never got with the Accord (usuallt 32-33 tops)The big question is, will GM ask $5k more for the diesel than for the gas version, as usual? Mercedes only asked $1k m ore for the diesel, $51k vs $50k for the gas back then, which you would recover in just ONE YEAR of average miles driven.
  • Cprescott Lucid has the right idea about building cars - I agree that these have a presence to them and certainly make all Teslas look like cheap golf carts with doors in comparison. I hope Lucid survives because they actually build luxurious products and not pretenders like Tesla.