PALO ALTO – The number of Tesla’s (NASDAQ:TSLA) Model S is quickly overtaking other vehicles on California’s roads as customers switch in droves to the luxury electric sports sedans. In June the company’s Model S outsold Buick, Cadillac, Chrysler, Fiat, Jaguar, Land Rover, Lincoln, Mitsubishi, Porsche, and Volvo in the nation’s largest auto market.
The numbers are impressive as Tesla only markets a single model, compared to the wide range of models that traditional automakers offer, including compact cars and sport utility vehicles. According to a recent study conducted by R.L. Polk & Company (PINX:POLL) for the California New Car Dealers Association found that Tesla garnered more than 12 percent of the luxury sports category in the first half of 2013, outselling the Audi A6 (FWB:NSU) and the Lexus GS. Lexus is owned by the Toyota Motor Company (NYSE:TM) who also holds a 10 percent stake in Tesla. The Model S also outsold the Audi A4, Mercedes M Class (FWB:DAI – Daimler also holds a stake in Tesla), and the BMW (XETRA:BMW) X5.
It would appear that the car that was once the plaything for tech millionaires has become a serious competitor of German and Japanese luxury cars. Further helping Model S sales are the best-in-class safety ratings the car has received from both Consumer Report and the U.S. Department of Transportation.
Today almost 7 percent of all vehicle sales in California are alternative vehicles, of which pure electric cars account for 1.1 percent, almost a 300 percent increase from 2012. The Model S is taking share away from hybrids including the Toyota Prius, at least in California. However, almost 70 percent of Prius sales are in the other 49 states. Sales in California are usually an indication of where the U.S. auto market will go in a few years’ time.
Despite the success, questions remain as some analysts question how much the company can grow on the back of one luxury car before their competitors catch up. At this point, Tesla’s advantage is not its sales, but rather the technology that drives the cars and this could position the company and their partners at the nexus of the next generation of automobiles. If so, the company’s earlier goal of 40,000 vehicles could be viewed as too conservative as there is a distinct possibility that most, if not all, electric cars would be licensing the company’s technology. Either way the Electric Vehicle market is set to grow quickly and Tesla is uniquely positioned to capitalize on this growth.