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700,000 Tesla Model 3 Sales Per Year — Optimistic? Pessimistic? Spot On The Money?

Tesla CEO Elon Musk has projected demand of around 700,000 cars a year for the Tesla Model 3. Some of you think that’s optimistic. Some of you think it’s pessimistic. Some of you probably wouldn’t bet one way or the other. Below are a few considerations on each side of the coin.

Tesla CEO Elon Musk has projected demand of around 700,000 cars a year for the Tesla Model 3. Some of you think that’s optimistic. Some of you think it’s pessimistic. Some of you probably wouldn’t bet one way or the other. Below are a few considerations on each side of the coin.

Stealing from All the Models

One of the hard things about how the Model 3 will slip into sedan sales is that it’s not “just another model.” It’s not just competing with the BMW 3 Series segment, but also with the Toyota Prius, Toyota Camry, and Honda Civic. Like the Model S before it, people are pulled to the Model 3 for a variety of reasons — to cut global warming pollution, to improve public health, the sporty drive, the advanced tech, the styling, to cut oil addiction and all the deaths and mess that come with that. This means it captures buyers who just want a sporty, small, premium-class sedan, as well as people who want a fuel-efficient car with a moderate price tag and total cost of ownership.

I recently compared the specs of the Model 3 with 22 potential gas competitors. There are also several electric cars it could pull sales from. There are Porsches and Mini-branded cars it could take sales from. All in all, it’s hard to know how broadly the conquest sales are — which makes estimating demand hard — but we do know there will be broad conquest sales. That said, will Tesla pull 100,000 sales a year from these other options or 1 million sales a year? The estimates are all over the map.

Just looking at 2016 US sales of the 22 models in the article linked above, you get up to 818,401. Then there’s Europe, there’s China, and there are other markets. Additionally, as I just highlighted, the Model 3 should be replacing far more than those 22 models for many of its new owners.

Tesla Network

It has long been presumed that Tesla will launch an on-demand robotaxi service similar to Uber or Lyft once self-driving cars are allowed to roam the streets — or perhaps even beforehand for Tesla owners who want to be drivers. How this relates to an annual sales figure is up for debate.

On the one hand, if Tesla is a leader in this realm, it could capture a large segment of the robotaxi market — which could be huge. Or perhaps it won’t be a huge market? We don’t really know. I personally presume this will be a large market by 2025 (just from regions where self-driving cars are allowed by then, of course), but 2025 is still further out than I assume the 700,000 figure is projected for.

Of course, on the flip side of the robotaxi coin, if people start using robotaxis much more, that would presumably mean a drop in personally owned car use and sales. Taking that into account, perhaps Model 3 demand for personal car ownership will drop a great deal compared to what we are presuming. This is all so speculative that I wouldn’t criticize anyone for their projections, but I think Tesla Model 3 is already in strong demand for fleets and that the figure will grow dramatically by 2025 — without cutting too much into personal ownership of this model.

The Model Y Cannibal

Another big wildcard that comes up is how much the Tesla Model Y will cannibalize Model 3 sales. Surely, once this model is unveiled, some people who would have bought the Model 3 will change their mind and go for the Model Y, but how many?

Elon Musk previously said that he expected Model 3 + Model Y demand to reach 1–2 million cars per year. With greater demand for CUVs, 700,000 annual sales of the Model 3 and 1.3 million annual sales of the Model Y make sense to me … presuming there really is demand for 2 million units of these two models per year.

Personally, I think there’s demand for many more than 2 million. The Model 3 is so much better than any cars in its price range. Sure, plenty of buyers will stick behind with their vanilla-flavored BMW 3 Series, Audi A4, or Toyota Camry, but millions of buyers will learn that the Model 3 and Model Y offer much more consumer value for the money.

Other Competitors

How much will competitors from conventional automakers come in and slow the rise of Tesla? Mercedes has the EQ brand underway. Volkswagen has the ID platform. Practically every automaker has a semi-serious electrification plan.

The problems for these competitors in my eyes are varied, but the biggest factors that I think will guide people to Tesla are its Supercharger network, its higher tech (Autopilot, navigation, over-the-air updates), its more competitive battery pricing and supply, and its reputation for performance. But we’ll see — a high number of buyers will feel more comfortable sticking with an old auto brand than jumping over to a Tesla.

Honestly, What Can Automakers Do About Tesla Model 3 & Model Y?

Will Tesla Model 3 Become Top-Selling Car In USA? #2? #3? #5?

1–2 Million Tesla Model Y & Model 3 Per Year? Stop Smoking Crack

Tesla Model 3 vs 22 Competitors — The Straight Specs

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Written By

Zach is tryin' to help society help itself one word at a time. He spends most of his time here on CleanTechnica as its director, chief editor, and CEO. Zach is recognized globally as an electric vehicle, solar energy, and energy storage expert. He has presented about cleantech at conferences in India, the UAE, Ukraine, Poland, Germany, the Netherlands, the USA, Canada, and Curaçao. Zach has long-term investments in Tesla [TSLA], NIO [NIO], Xpeng [XPEV], Ford [F], ChargePoint [CHPT], Amazon [AMZN], Piedmont Lithium [PLL], Lithium Americas [LAC], Albemarle Corporation [ALB], Nouveau Monde Graphite [NMGRF], Talon Metals [TLOFF], Arclight Clean Transition Corp [ACTC], and Starbucks [SBUX]. But he does not offer (explicitly or implicitly) investment advice of any sort.


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