Tesla’s Model 3 Sales Target By End Of 2018 Would Outpace BMW 3-Series/4-Series & Mercedes C-Class Combined

Tesla Model 3


Tesla Model 3

Tesla Model 3

A little over a year ago, Tesla CEO Elon Musk revealed the upcoming Tesla Model 3, which was slated to become the world’s best electric car value of the future. The quick, stylish five-seat sedan would move to take on the likes of the iconic BMW 3-Series and 4-Series, and the Mercedes C-Class.

2016 BMW 3-Series (Image Credit: flickr via Automotive Rhythms)

Fast forward to today, and the Tesla Model 3’s production appearance is mere months away. The Model 3 will begin production in July, and move progressively toward high volume delivery.

Tesla must push the ramp up hard, since there are ~400,000 people that have made a deposit on the car, and are eagerly awaiting their vehicles. Beyond filling the reservations, Tesla assumes that many others will be eyeing the inexpensive, all-electric offering.

During Tesla’s recent Q4/2016 Earnings call, Musk explained that the automaker is setting up orders with suppliers, specifying orders for:

“1,000 cars a week in July, 2,000 a week in August, and 4,000 a week in September.”

He went on to say that Tesla should be producing 5,000 cars a week by the close of 2017, and 10,000 a week by the end of 2018. If achieved, we are looking at over 400,000 cars by the end of next year. He has also stated that Tesla’s end-goal is to have the ability to produce 500,000 vehicles (3, S and X) by the end of 2018.

2016 Mercedes C-Class (Image Credit: flickr via Linda Marrero)

Referring back to the competing BMW 3-Series and 4-Series, and Mercedes C-Class; even if Tesla only delivers half of these Model 3’s in the U.S., numbers will still be ahead of  all of the latter cars combined.

In 2016, BMW sold ~106,000 3-Series and 4-Series vehicles in the U.S. Mercedes only sold ~77,000 C-Class vehicles during the same time period.  So, Tesla only needs to deliver a little over 183,000 Model 3 sedans in the U.S. by the end of 2018 to take the cake.

Some analysts don’t believe that Tesla can pull off its production estimates. Bloomberg New Energy Finance electric car analyst, Salim Morsy, said:

[Selling that many $35,000 sedans in the U.S.] “would be absolutely unprecedented based on what we know about car markets today and how people spend their dollars. It could happen. I’m pretty sure it won’t.”

But, less than 200,000 vehicles in the U.S. in 18 months may not seem so steep. Deliveries will start with U.S. reservation’s holders in California and move east. Tesla doesn’t even have to hit its lofty goal of 500,000 vehicles by the end of 2018, to easily surpass Mercedes’ and BMW’s competing offerings. If Tesla can outpace the two combined, it will go down as quite the epic feat.

Source: Autonews

Categories: BMW, Mercedes, Sales, Tesla

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56 Comments on "Tesla’s Model 3 Sales Target By End Of 2018 Would Outpace BMW 3-Series/4-Series & Mercedes C-Class Combined"

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Lots of eager buyers for the 3. Tesla will soak them up and then roll out the Y to scoop up the CUV market.
And move on to a ridge line type pickup or A van .

It is unlikely that 10% of the reservations will get the tax credits, stay tuned.

” I’m pretty sure it won’t.” Why is Morsy so sure?

Will be interesting to see how the current TSLA short-call-spread & bear-put-spread contracts look post Model 3 start of production.

Because there is no way a car company can sell 25,000 cars priced at $80,000+ in a quarter. Oh wait, they just did.

That 25k was worldwide only ~6k were sold in the US. For all we know Tesla might not have 100k preorders in the US.

Could it be that so many people who made a reservation, will cancel it by the time it gets possible te really buy one. Did they only make the reservation to support Tesla, or keep track of the latest news and never really intend to buy one for real ?
If this is true, Morsy could get it right…?
I hope not of course !

Some reservation holder will certainly bail when it comes time to commit to a delivery.

Some others who didn’t lend Tesla $1000 will add their orders after they see a “real” product delivered.

But even if Tesla has only 50% uptake that will still be more cars than BMW and Mercedes delivered last year.

So the conversation is just hairsplitting. We know they will deliver, and deliver in significant volume. The rest is just noise to keep the analysts employed.

Incorrect. You are comparing 50% of Model 3 world-wide reservations with BMW and MB sales in the US only.

Tesla sold more 3s this month than BMW has sold their 3 series in any month in the US for the past 2 years – that is a meaningful comparison. Tesla is just getting started in the foreign market – BMW has dominated that segment for decades.


@Marciemarc asked: “Did they only make the reservation to support Tesla, or keep track of the latest news and never really intend to buy one for real ?”

Answer: No. That many people are not going to make a $deposit without intending to buy a car.

Well, I’m not so sure … wasn’t there a recent article here about how Tesla is selling a “dream”. For $1000 you get the dream of supporting a company you believe in and can imagine driving that sexy fast fun sustainable car … even if you know you can’t really afford it. It’s worth the $1000 bucks, especially if you can get that cash back after you realize your kids won’t fit in the back, your back can’t bend to get in the front seat, the build and service is a bit shaky (on triple/quadruple the customers, it’s gonna be tough for them) and you won’t get the $7500 federal rebate on it (though that won’t really matter after you add all the cool options you want that puts the price to $45k).

I’m on the list for the Model 3 and I hope I don’t succumb, but I also have to realize that for me, shelling out $35 k (or even $25k) is more than I’ve ever paid for a car and I’m sure there’s a huge portion of people who, regardless of how good the car is, won’t be able to justify that in their budgets.

Any Model 3 cancellations (for those like you as you above described have made a $1,000 order deposit to pretend “dream” purchase a Model 3) will quickly be displaced by new order deposits once Models 3 goes into production.

As much hype and “free press” as Model 3 gets now it will be off the charts once the car goes into actual production.

There is no need for anyone to pay $1000 to indulge in a dream. I can dream about driving a well-appointed Tesla Model S P100D; that doesn’t mean I’d feel any urge to pay $1000 for a reservation to support my fantasy!

Sure, there are some people out there who paid $1000 not as a serious commitment, but just to keep their options open. The cancellation rate for the Model S was at one time reported to be 25%, and perhaps that same percentage will apply to the M3; perhaps even a bit more.

But anyone who thinks that the majority of people who paid $1000 for a Model 3 reservation were not serious… are indulging in a pessimistic fantasy even more unrealistic than my dream of one day driving a Model S!

Then maybe you should have bought TSLA shares instead?

I just want a low interest rate on my model 3 loan…do you hear me Elon Musk?

They’re not going to offer low interest rate when there is a line of people waiting. Go to your local credit union for the best rates.

An interest rate of 2-3% would be nice.

Tesla is currently offering 1.49% for the Model S/X:


Mister G said:

“I just want a low interest rate on my model 3 loan…”

You’re not gonna get one, and that’s one of the reasons we can be sure that the majority of Model 3 reservation holders are quite serious.

There aren’t a lot of people for whom the interest on $1000 means nothing. Most people would be far more likely to invest that $1000 in a CD or treasury bonds or some other guaranteed safe investment which will actually earn interest, rather than put down $1000 on a car where it will earn the nothing. That is, they’d be far more likely to do that unless they’re actually serious about buying a Model 3!

Now, that’s not to say that there aren’t some out there who are rich enough that a year or two of interest on a $1000 means nothing. But likely most who are that rich would be more likely to buy a Model S or X anyway. The Model 3 is aimed more at people who don’t just shrug off spending an extra thousand dollars here and there.

Oops, I misunderstood Mister G’s comment; I thought he was asking Tesla to pay reservation holders interest on the free loan that the $1000 deposit represents.

Its true that some reservation holders will surely bail out due to variety of reasons like some could not wait that long and bought something else, some did not like the final price, etc. However, at the same time, if the car is a hit (which I think it will be) we should not ignore a massive flood of prospective buyers who are not reservation holders. Trust me that are millions of those (not hundreds). So I guess it will more than even out. The question is if Tesla would deliver such a hit car and if it would be able to produce it that fast.

@Marciemarc asked: “Did they only make the reservation to support Tesla, or keep track of the latest news and never really intend to buy one for real ?”

So would you put down $1000 for a year and a half just to get news and updates? If yes, I have an email address for you to send your money.

It sure would be a great thing if we didnt need to import German high maintenance junkers here anymore.


Finally, those Germans with market share of 1.9% (BMW) and 2% (Daimler) have insulted our pride long enough. Now we buy all the same car instead.

Talk about the other guy griping that Tesla is selling a dream for $1000… Sheesh, you’re spot on. It’s the German junk with high depreciation, maintenance and parts that are selling a dream… I drank the German koolaid one time too many times, never again.

I don’t care how many others they sell. I just want one.

Their target is also Toyota and Honda.

Not with the Model 3. Probably Lexus IS but not Accord and Camry where the volume is – totally different price category.

A recent survey of Model 3 reservation holders said more people currently owned Toyotas than any other brand. FWIW.

If Tesla starts delivering Model 3 in July – it will become a very real threat to the Germans and luxury Japanese Brands.

But are there really 500,000 people A YEAR who will want a 45 K electric sedan? How many 45K 4 door small sedans are sold a year now?

Exactly. This is basically a zero sum game. If Tesla sells 100k Model 3’s then other manufactures have to sell 100k less. Especially in the US where the buying population is pretty static if not declining. I’m sure to fight that BMW, Mercedes, etc.. would rather cut prices to keep up the volume. Once you lose a customer they are hard to get back.

In 2006, how many people would buy an $800 cell phone every two years?

That is why the analyst says “based on what we know about car markets today”, implying that the auto market could change.

Delta — It is actually 500K production combined of the Model 3, Model S, and Model X by the end of 2018. It isn’t 500K Model 3’s.

This is in Tesla’s SEC filings:

“We expect our production will increase considerably each year for the next several years, and are targeting an overall vehicle production level of 500,000 vehicles, including Model S, Model X and Model 3, in 2018.”


I realize it doesn’t help that the article didn’t make this clear…

Nix – it’s not just this article. Musk says all kinds of different things in conference calls. In the most recent he actually said 10k Model 3s per week (500k+/year) in 2018. Not all models combined. He also said they’d deliver 500k cars in 2018, previously the company said only they’d be at a 500k run rate by year-end 2018.

I think you’re right to look at SEC filings and ignore what comes out of Musk’s mouth. But it’s easy to see how people get different numbers.

Yup. Elon has a bad habit of shooting off his mouth, or tweeting without fact-checking.

That’s why it’s best to be skeptical of any of Elon’s individual comments, some of which — as you point out — are self-contradictory.

It’s 45K with options NOW, but in a year or two the price will drop with volume and battery prices, so demand will be maintained with pricing. Keep in mind, even the base model with no added options is a more valuable and optioned car than the 35K Bolt.

The bar is even lower when you consider that many Model 3s sold will represent one less BMW/MB/Lexus/Audi sold. Why do people leave out Lexus? Model 3 is an obvious IS killer and possible GS killer.

The biggest issue with the Model 3 is the interior. That’s going to be a hard sell for most. Spartan is an understatement.

It isn’t just Lexus that they left off. There are a couple of dozen cars that compete with BMW and Audi in the small and midsize luxury car market segments.

To produce 500,000 cars a year with say with an average battery pack size of 65kWh, then you’d need 32.5GWh of battery production per year. As far as I know, no company other than Tesla is creating battery production to this scale. Every other car manufacturer will be constrained by battery production whether they are making it themselves or relying on some other battery manufacturer. Even LG Chem (one of a very small number of battery companies) has an almost pathetic amount of development in battery capacity. It was only recently LG Chem started to bang on about an amazing new battery production factory which was due to produce 3GWh of battery capacity per year once it came online at the end of 2018. Seriously??

3GWh is almost nothing in terms of annual EV car needs.

Given Tesla built the Gigafactory in less than 2 years in a desert with little money. I think LG can do it as well if necessary. We’ll know in a year from now how smart Tesla’s decision was. They will not be the only game in town by then.

Mil – LG’s factory in Poland comes online in 2H17. End of 2018 is when all lines will be fully operational.

LG claims 280,000 EV/year capacity when the Poland plant is finished. That’s still less than what Tesla claims, but it remains to be seen if Musk will hit his schedule (first time for everything!). And it’s not that hard to add capacity, 12 months from breaking ground to initial production for LG in Poland.

Mil said:

“Every other car manufacturer will be constrained by battery production whether they are making it themselves or relying on some other battery manufacturer.”

Exactly right, and thanks!

It amazes me that so many EV advocates try to handwave away the constraints on production due to battery supply.

* * * * *

Doggydogworld said:

“And it’s not that hard to add capacity, 12 months from breaking ground to initial production for LG in Poland.”

And how long from initial production to full capacity production?

The rule of thumb is that it takes two full years to build a factory and fine-tune it for mass production. If you’ve got solid evidence that battery factories can be built and spun up to (or near) full capacity in significantly less time, I’d like to see it.

Based on publicly stated plans at least, no battery maker other than BYD is even in the ballpark of building out capacity as fast as Tesla is. And it’s not like large-scale factories can be built and staffed in secret. If and when other companies move to match Gigafactory 1 in battery cell output, we should know about it for well over a year before that can actually happen.

@Pushmi – I think ramping to full capacity has a lot more to do with economics than technical issues. A large factory needs time to find customers for full output (or, if dedicated to a single customer, needs time for that customer to ramp). It also helps to bring suppliers up in smaller chunks. Finally, large factories run multiple lines. You want to bring one line up at a time, for obvious reasons.

There was a time when Tesla talked as if the entire GF would come online at once. This was just silly, and they quickly changed to a phased buildout.

Lots of car mfr CEO’s are freaking out seeing the photos of release candidates on public roads. It’s like Bigfoot never thought it was real…..
Wait till they see thousands belting delivered at Tesla delivery centers…..

The Model 3 is primarily a threat to all the ICE luxury makers but especially the Germans makes.

It has already impacted their sales rather significantly as potential buyers wait for the Model 3 before buying.

However, it will also significantly impact Lexus, Infiniti, Acura, Cadillac, Lincoln and Hyundia’s Genesis models too.

I think that base Model 3s will eventually start eroding some the top line Accord, Camry and other similar sales either directly (especially once full autonomy-rental) or eventually by driving many of those buyers to seek other lower priced electric models like the Hyundia Ioniq.

The disruption has already started and will be massive.

Get ready for the influx of all the EV noobs on the roads.

I predict a bunch of autopilot crashes, sudden acceleration through walls, and massive waiting times for charging spots… esp. L2 chargers.

Oh, and drag times will have a dozen more videos drag racing on public roads.

It’ll be good business for the EVS websites though. Lots of news to report.

Yeah. I concur. 200/250 thousands 35k sedans in USA is nativity of author.

Or heck, does author have Tesla stock or what?

Just for the record: “Author” only stated “200,000 vehicles in the U.S. in 18 months may not seem so steep”, all other targets/production goals were via Tesla.

That said, not what brought me out to comment, lol.

To the best of our knowledge, no person employed by InsideEVs ever has in the past own TSLA shares, nor do they today own Tesla stock, nor will they in the future.

We have a no tolerance policy for owning securities (of any kind) related to the EV segment. And if anyone is found to have such a holding, they will immediately no longer write at IEV…as journalistic integrity is important to us.

Sidenote: Always feel like that disclaimer needs to be repeated whenever there is an insinuation of an ulterior motive suggested or accused, as many media outlets do not have the same policy.

Who does Tesla use to finance vehicle purchases?

I think it depends on what state you are in, but here is their current list of companies they say they may submit your loan to:

Wells Fargo Bank
US Bank
JP Morgan Chase
TD Auto
Alliant Credit Union
Technology Credit Union


Yeah they have a market share of 1.9% (BMW) and 2% (Daimler). And they produce more cars in the US than they sell in the US. So why you americans scared of them?

Tesla has had its naysayers since day 1. So far at least, the naysayers have nearly always been wrong, and certainly they’ve been wrong about everything of importance. Tesla has leaped from success to success to greater success, repeatedly confounding the majority of financial analysts.

Of course it’s highly unlikely that Tesla will continue its remarkable string of successes forever, but it seems to me that betting on the Model 3 failing to capture as much of the market as Tesla thinks it will, would be a rather foolish bet.

Go Tesla!

Salim Morsy smokes crack and likes it a bit too much. Until mid-2015, BMW combined U.S. sales of both 3-Series and 4-Series. In 2014 that came to 142,232 units. Yes, the BMW 3-Series/4-Series outsold the Toyota Prius at 122,776 units that year. This was the second most cars in the 3-Series that BMW had sold in the past 15 years or so. In 2007 they sold slightly more, at 142,490 of 3-Series Sedans, Coupes, and Wagons. The 4-Series did not arrive until the 2013 model year. But BMW 3-Series sales have been steadily dropping in recent years. In 2016, sales dropped 25.5% from 2015, and below 90,000 units to 70,458 for the first time in 15 years. Even during 2009, a bad year for most automobile manufacturers in the wake of the 2008 financial collapse, BMW managed to sell 90,960 units of the 3-Series. And even 2015 Sales were only 94,527 units, though that may have been slightly lower without the 4-Series, but it was the only fourth time since 2002 that they didn’t sell at least 100,000 units here. I submit that BMW’s sales woes are due to the anticipation of Tesla Model ☰. They came in second place… Read more »