I’m sure this will change in the months to come, but after Tesla’s (TSLA) initial Model 3 delivery event in July, sales are not off to an impressive start in August. In the morning of September 1, General Motors (GM) reported August month sales for the Chevrolet Bolt EV – the main competitor for both the Tesla Model 3 and Model S.
GM managed to sell 2,107 units of the Chevy Bolt EV in the U.S. market in August. It has not yet reported global sales, which would include Canada and Norway (where it is sold under an Opel Ampera label).
In contrast, the authority on U.S. plug-in car sales reporting, Insideevs.com, reports that it has estimated Tesla Model 3 sales at a grand total of 75 units for August. Yes, seventy-five. I kid you not:
That means that in the U.S. market in August, the Chevrolet Bolt EV out-sold the Tesla Model 3 to the tune of 28:1. Yes, for every Tesla Model 3 sold in the U.S. in August, General Motors sold 28 Chevrolet Bolt EV cars.
I can hear the objection already: But the Model 3 is just ramping up right now! You just wait another month, and it will clobber the Chevy Bolt EV!
Yes, I know. That may very well happen that at some point starting in the next few months. After all, the U.S. is the market where Tesla will focus its sales once it hits 200,000 cumulative U.S. deliveries, so as to maximize the number of units it can sell that are eligible for the (up to) $ 7,500 federal tax credit.
If Tesla hits 200,000 on the first day of a quarter, it will have a grand total of six quarters with an unlimited number of U.S. sales eligible for a federal tax credit. Yes, you heard that right: An unlimited quantity of cars. Every single one it produces, it can sell in the U.S. market and allow the customers to attempt to qualify for the Federal tax credit. If Tesla sells 500,000 units per year – as it has said it will do in 2018 – six quarters at that 125,000 a quarter pace, all directed at the U.S. market, it would mean 750,000 cars milking the Federal treasury, over and above the 200,000 before the trigger.
Furthermore, if you assume that during those 18 months (six quarters) Tesla manages to increase production slightly, that 750,000 number might look more like 800,000, and when it’s all said and done Tesla’s customers would have collected up to a grand total of 1 million federal tax credits of up to $ 7,500 apiece (in the last few quarters, they decline to $ 3,750 and $ 1,875).
Given this focus, and given Tesla’s seemingly perpetual willingness to sell a dollar for 75 cents, the Model 3 proposition is very good for the consumer and should lead to greater U.S. Model 3 sales than the Chevrolet Bolt EV some time in 2018 and/or 2019. So yes, I do expect the Model 3 to beat the Bolt EV in terms of U.S. sales at some point possibly starting within only months from now.
However, the current 28:1 ratio in favor of the Chevy Bolt EV is a deep hole for Tesla from which to climb. Tesla bulls think that it will all happen in September 2017, and if not in September, then in October for sure. Perhaps it will. Otherwise, in November, December… or January 2018. Or at the very least, some time in 2018 or 2019.
In the meantime, GM doesn’t look so bad. It beat the Model 3 to market by almost a year, and so far it’s beating it in U.S. sales to the tune of at least 28:1. Let’s put it this way: I don’t think we’ll ever get to the point where the Tesla Model 3 will beat the Chevy Bolt EV in sales to the tune of 28:1!
But wait, there’s more!
The Chevrolet Bolt EV doesn’t only compete with the Tesla Model 3. It also competes with the Tesla Model S. After all, the Bolt’s passenger interior space is the same (94.4 cubic feet) as the Model S (94.0 cubic feet) and they have similar driving range for the base Model S (238 miles for the Bolt vs 249), even if the Model S of course costs about twice as much.
Looking at the 3Q-to-date U.S. sales numbers (July + August combined), here is how the Tesla Model S compares with the Chevrolet Bolt EV, according to Insideevs:
Tesla Model S: 3,575 units
Chevrolet Bolt EV: 4,078 units
So there you have it. Chevrolet Bolt EV didn’t just out-sell the Tesla Model 3, but also the Model S.
But wait, there’s even more!
We have established that the Chevrolet Bolt EV out-sold each of the Tesla Model 3 and Model S in the U.S., but what about the Model 3 and Model S “combined” for July and August?
Tesla Model S plus Model 3: 3,680 units
Chevrolet Bolt EV: 4,078 units
It turns out that the Chevrolet Bolt EV can play simultaneous chess – or perhaps simultaneous ping-pong? – in that its U.S. unit sales for July and August beat the Tesla Models S and 3 combined.
For a car that’s sometimes so maligned in the media, that’s not bad for the Chevrolet Bolt EV – outselling the Tesla Models S and 3 combined for the cumulative two first months of this quarter. The Bolt EV is definitely the Rodney Dangerfield of the U.S. electric car industry: It gets no respect!
The Chevrolet Bolt EV has not expanded its sales reach much beyond the U.S., Canada and Norway (where it is sold under the Opel Ampera label) yet. One might also question what will happen to the Bolt now that the PSA Group acquired the Opel business from General Motors on August 1. We will just have to see if, when and how the Bolt EV (Opel Ampera) gets rolled out in Switzerland, Germany and beyond. I fear the worst, but hope for the best.
Instead, the Tesla Model 3 is more likely to face a bigger international threat from Nissan (OTCPK:NSANY), with its all-new LEAF 2.0 that is scheduled to be unveiled on September 5 in Japan. This electric car will be made in three factories on three continents, and could be available in more geographies far more quicker than not only the Chevrolet Bolt EV (Opel Ampera) but also the Tesla Model 3.
As such, one might reasonably assume that Nissan will dominate European and Asian electric car sales in 2018, as a result of widespread global availability of the all-new LEAF 2.0 starting in late 2017 or early 2018.
Of course, it is possible that Tesla will juice its September 2017 U.S. sales as a result of massive discounting. We have news reports this morning of Tesla slashing its prices by up to $ 30,000 per car:
For perspective, that means that Tesla’s discounts per car will exceed the expected base price of a Nissan LEAF 2.0, which is estimated to be somewhere around $ 29,000.
With discounts that huge, Tesla should be able to move a lot of units. What if Nissan decided to cut its prices by $ 30,000 as well, so that the car would be completely free?
One might logically conclude that Tesla will see a massive margin decline in the September quarter. As the saying goes, perhaps they will make it up in volume.
Disclosure: I am/we are short TSLA.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: At the time of submitting this article for publication, the author was long FCAU and GOOGL, and short TSLA. However, positions can change at any time. The author regularly attends press conferences, new vehicle launches and equivalent, hosted by most major automakers.
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