The real targets are and always have been Toyota and VW. Tesla sold 440,808 vehicles on Q1 2023, so its annualized rate is currently 1,763,232. The company is on track to sell ~1.8 to 2.0 million vehicles this year -- already in the same league as BMW and Mercedes. Tesla unit sales have been growing by ~50%/year, on average. If unit growth stays at this level (a big IF!), Tesla will overtake Ford in 2-3 years, GM in 3-4 years and Toyota and VW in 4-5 years.
World's largest carmakers by number of vehicles sold in 2022:
Automaker # sold 2022
----------------------------
1 Toyota 9,566,961
2 VW 8,263,104
3 Hyundai Kia 6,848,198
4 Stellantis 6,002,900
5 GM 5,941,737
6 Ford 4,235,737
7 Honda 4,074,372
8 Nissan 3,225,478
9 BMW 2,399,636
10 Changan 2,347,163
11 Renault 2,051,174
12 Mercedes 2,043,900
13 Maruti Suzuki 1,940,067
14 Geely 1,432,988
15 Tesla 1,369,611
I believe Tesla is going to execute exceptionally well in this regard with Tom Zhu running automotive. Like Elon, he is obsessed with execution and this is his entire focus.
Legacy automakers are run by management where this is not their life. No judgement, just an observation of force behind market participants.
With that said, energy is rapidly eclipsing the automotive business. Lathrop Megafactory has a two year book of work ahead of it, and Tesla will shortly be building another Megapack factory in China to keep up (Lathrop went from groundbreaking to production in a year).
They are building a gigantic factory in Mexico and likely in China to build a new model. But the reality is most cars sold are simply SUV or sedans. If they add a smaller car and pickup/van platform. They can cover millions of sales with that alone.
Tesla saves a huge amount of money, VW in comparison has a MEV platform but then essentially builds almost the exact same car 4 times, once for VW, once for Skoda, once for Audi. And then runs advertisements for each of them. Achieving the same volume without splitting into many brands is a huge cost advantage.
No it isn't. If you sell 1 million vehicles of 5 brand or 1 million vehicles on 1 brand, you clearly save a huge amount of money not to have to design 5 different cars and 5 different production lines, 5 different versions of the software, 5 different companies that each have their own overhead and so on.
Tesla makes the same Model Y on 4 different factories and produces more of them then all SUV that VW makes on their platform. And VW produces it in many more different plants.
Having multiple brands on one platform is only an advantage if you somehow think that having multiple brands increases your sales.
This article sits on the false premise that Tesla aimed to make luxury vehicles long-term, which we know isn't the case. Elon has long stated that the plan was to start with profitable, low volume vehicles and work his way down to mass market. While you can make comparisons to Mercedes in regards to their profit margins, I think the more accurate explanation is that Tesla kept their prices high to reap profits while the cars were in demand, and now that the car market has more or less stabilized they're adjusting their prices again while other companies (who were maybe less flexibility in price due to dealership models) aren't.
Can Tesla really produce cheap cars with decent quality?
They already have huge problems with the not-so-cheap models. And the software that used to be secret sauce is now subject of multiple court cases after some crashes and multiple deaths.
Quality problems are not because of money, and more money doesn't really solve quality problems.
Making the car cheap depends on batteries, motors, electronics, wires, controllers and so on. Tesla tends to be quite good at that stuff. These things are where you make a car cheaper.
Final assembly quality issues will not get worse because its a smaller cheaper car. And on cheaper cars you have way less competition in terms of quality anyway.
If they can really bring out a car with the kind of price performance/range intersection that they are planning, and build millions, final assembly quality issue won't matter.
But all rankings are imperfect. The best indication that consumers do like Tesla vehicles is that unit sales have been growing ~50%/year by taking market share away from legacy automakers. For example, the Model Y is now a top-selling vehicle in many markets worldwide:
Further the final assembly problems don't really exist like they did back in 2014, it's much more minor and on par with other manufacturers. For whatever reason though there's a small segment of people who cling to this idea they're low quality like their lives depend on it
The electrek article is...simply wrong. For example, the Parkers average owner rating for the Model 3 is a dismal 3.5, and the Volvo XC40 is a 4.0. (Eletrek reported a 4.6 for the Model 3 from Parkers and a 3.9 for the Volvo from Parkers.)
Similarly, the other average ratings are all inflated in the Eletrek article compared to what is actually presented on the various review sites (Parkers, Edmunds, etc.).
If anything, the review sites clearly demonstrate that most Tesla owners are highly frustrated with their cars after the first few months of ownership and most regret their purchase.
Meanwhile Tesla's are nearly $10,000 profit per car.
BTW, I still wouldn't invest in auto companies and don't think Tesla's stock is gonna grow to the moon, because apparently when everyone makes EVs there's going to be serious issues with being able to make that many batteries via rare earth materials. But I'm no expert.
Tesla sells luxury cars, so it should have a high profit per car. Its luxury competitors also make a lot of money per car.
For comparison: Ford's profit per F150 sold starts at $10,000, and that doesn't take into account upgrades. Their margins on F250 and F350 sales are even higher. Their profit margin is dragged down by the many low-cost cars they sell in other countries, since unlike Tesla they serve the entire market and not just a small slice of it.
Mercedes Benz (21.7%) and Mazda (21.9%) actually had higher profit margins than Tesla did (<20%) for the past calendar year.
> Tesla sells luxury cars, so it should have a high profit per car. Its luxury competitors also make a lot of money per car.
You are commenting on a very article that reports Tesla moving away from luxury toward mainstream market. The latest gross margin number is after they slashed price substantially in Q1.
> Their profit margin is dragged down by the many low-cost cars they sell in other countries, since unlike Tesla they serve the entire market and not just a small slice of it
Those low margin vehicles contribute to Ford’s success. Without them there is no Ford. They help with the economy of scale, without it Ford’s cost would still be higher. They help satisfy the dealer network, without it Ford wouldn’t be able to push their higher margin trucks. And so on. Worth mentioning that Ford did abandon certain segments in the past, such as Ford Fusion or Ford 500.
> Mercedes Benz (21.7%) and Mazda (21.9%) actually had higher profit margins than Tesla did (<20%) for the past calendar year.
Wrong. Tesla’s gross margin for 2022 is 25% [0]. This article discusses Tesla going down market.
World's largest carmakers by number of vehicles sold in 2022:
Source: https://www.factorywarrantylist.com/car-sales-by-manufacture...