Tesla has added another billion to its existing $6.2 billion in cash reserves, and most of the credit belongs to Tesla’s Model 3 overseas. The California carmaker is targeting the global market, and nearly half of the 300,000 Model 3 deliveries were to Europe and China, not just the USA alone.
The Rise of Tesla
After being criticized for its cash position and being on the verge of bankruptcy, Tesla ramps up production for its first mass-market vehicle, and namely the Model 3 sedan. With their second consecutive profitable quarter report in January, the company proved to be more consistent on profits, cutting costs, and growing revenue.
2019 was a turning point for the California company, which is now entering its mass-production phase. Tesla is retooling itself to become a global automaker rather than targeting only a specific audience interested in the way more luxury Model X and Model S.
In 2020, Tesla looks capable of delivering 500,000 vehicles this year (the Model 3 sedan and the upcoming Model Y crossover mostly). These numbers are believed to exceed 1 million by the end of 2022 (according to an investor note by equity research firm Wedbush).
Crashing the Luxury Competiton
What puts Tesla in a great position is that its luxury rivals are still too expensive and the entry-level competitors aren’t too attractive. For example, the average price for the Jaguar iPace is $77,109 and the luxury Audi eTron is $75,524. How about the standard EVs? The Chevy Bolt sells for about $38,000 and the cheapest offering is the Nissan Leaf for $32,000.
Tesla Model 3, on the other hand, is selling for $35,000 (as a special order). Considering its luxury, it stands out from the other vehicles in the below $40,000 price range. As for its luxury competitors, the price is crushing them. Even the Model Y, which is expected to start at $48,000, is far more affordable than those of brands such as Mercedes, Lexus, and BMW. Also, in the future, the Model Y will come with a standard variant for as low as $39,000.
In conclusion, Tesla’s Model 3 and Model Y may have a profitable EV market segment all to themselves for years to come.
