Last week we surveyed 519 people in the U.S. regarding interest in buying a Tesla Model 3. We found a surprisingly high number (17%) of people would buy a Model 3 at $40,000. Even if this survey is off by 3x, the results still imply significant market share gains are in store for Tesla given their current U.S. unit market share is below 0.5%.
Consumers wait in line for over 1.5 hours to sit in a Model 3 at a showroom in TX. January 2018. Photo: ntxteslaowners
Survey results: “Would you buy a Tesla Model 3? ($40,000)”
Yes: 17%, No: 61%, Maybe: 22%
Source: Loup Ventures, survey age and household income distribution representative of U.S. census data.
First-time survey has limitations, but insights still valuable. Longer-term (10 yrs from now) we believe Tesla can capture 17% of the U.S. auto market share, consistent with our survey results. That said, this is the first time we have conducted this survey and the true value will be comparing future survey results to our most recent exercise. It’s easy for someone to say they’re going to spend $40,000 and harder for them to actually do it. Our optimism regarding this initial survey is based on dialing back the intent to buy by 60%, which would still indicate significant market share gains.
Expect Tesla market share to increase from 0.5% to 1.5%. As of the end of Dec-17 Tesla has delivered 1,772 Model 3s. We expect 14k in the Mar-18 quarter and 168k deliveries in 2018, with a 70% chance they actually hit those numbers. Separately, we believe Model 3 reservations are effectively unchanged at 455,000 since the last public update in August of last year. If we assume Model 3 deliveries are heavily weighted (70%) in the U.S. initially, and that Tesla delivers the net preorders over the next two years, we expect Tesla (Model 3, S and X) to make up 1.5% of all cars sold in the U.S.
Ramp in Model 3 production won’t be linear. As Model 3 production scales to meet this backlogged demand, it will not be a smooth ramp from ~1,000 vehicles per week today to their goal of 10,000 per week. Steps up in output require factory retooling and significant capex investment that will cause temporary steps down in production. In other words, don’t be alarmed by the inevitable news of Model 3 production issues, as it may be part of the natural process of scaling production.