Tesla’s brand loyalty has been notably high compared to some automakers, and with recent price cuts, the company has made it appealing for many to stick with the brand. As some express concerns about the current macroeconomic conditions, increasing competition, and the CEO’s public persona, data show that Tesla’s brand loyalty still appears to be wooing in repeat customers.
Citi analyst Itay Michaeli wrote in a recent note to clients that Tesla’s brand loyalty is staying strong, according to quarterly S&P Global data, and as detailed in a report from Barron’s. The data shows that Tesla’s brand loyalty remains high and that the company continues to take market share from other automakers.
Brand loyalty refers to a consumer’s likelihood to purchase their next vehicle from the same company rather than switching brands, and according to Michaeli, Tesla has some of the best loyalty data in the automotive world.
“Tesla continues to sport the industry’s most impressive loyalty metrics,” Michaeli wrote.
The news comes amidst concerns about CEO Elon Musk’s Twitter use, which Michaeli says hasn’t actually affected customer loyalty negatively in recent years, contrary to what some have stated. In fact, Michaeli emphasizes, customer loyalty for Tesla’s vehicles has actually increased in the past few years.
“Tesla’s brand loyalty has actually trended somewhat higher in recent years, dipping briefly in 2021 likely on supply constraints,” Michaeli added.
Roughly 67% of Tesla owners purchase another vehicle from the brand, according to the data, while the average luxury brand loyalty rate is at about 46%. Approximately a third of those driving Model Y crossovers previously drove Toyota or Honda vehicles. Michaeli notes that both Tesla’s Model 3 and Model Y are tending to take market share from other mainstream automakers, rather than from those in the luxury market.
“Interestingly, [the] data suggests that Model 3 and Y conquest more from mainstream brands than luxury brands,” Michaeli wrote. “Model 3 shows a similar pattern with Toyota and Honda accounting for about one-third followed by BMW, Ford and Mercedes.”
In recent years, competition within the emerging electric vehicle market has continued to increase. While only about 40 EV models were being sold in the U.S. market last year, the number has jumped to 74 in 2023, and S&P Global predicts there will be 113 models on sale next year.
Michaeli currently has a $175 price target on Tesla’s stock, with a Hold rating. Roughly half of the analysts that cover Tesla’s shares have a Buy rating on the stock, while the average Buy-rating ratio for S&P 500 stocks is around 53 percent. Tesla’s stock has an average analyst price target of about $191.
At the time of writing, Tesla’s shares are trading at $177.95 (+$1.06), up 0.60 percent from the day’s market open.
Originally published on EVANNEX, by Peter McGuthrie.
Have a tip for CleanTechnica? Want to advertise? Want to suggest a guest for our CleanTech Talk podcast? Contact us here.