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Model Y Aids Tesla European Chart Topping As China, Logistic Challenges Loom

Tesla Model Y

Tesla Model Y

 

Model Y Aids Tesla European Chart Topping As China, Logistic Challenges Loom.

“Tesla confirmed it is working on a next-gen smaller electric cars. The main focus would be on halving costs and achieving volumes higher than all other models combined”

Tesla is riding high in Europe, helped by the addition of the Model Y SUV, but it faces increasing competition from China now and later from locals like BMW and VW, while the logistics of importing some of its vehicles from the Middle Kingdom are coming under pressure.

CEO Elon Musk could rest on his laurels and enjoy the fruits of his hugely successful company, which generates record profits for a large automaker. Continued expansion means massive profit margins would come under pressure. In the normal world, larger production means less profit per sale, but Musk probably thinks he can do both. Is anyone out there ready to bet Musk can’t do that?

The Tesla Model Y topped the European sales charts for both traditional internal combustion engine (ICE) vehicles as well as battery electric vehicle (BEV) ones. The scale of that success is put into context by the 2nd place seller, the little Peugeot 208, an ICE vehicle probably costing about one-quarter of the roughly £60,000 ($73,000 after tax and before subsidies) average price of a Model Y. Tesla sold 29,367 Model Y’s in September to top the charts compared with 19,601 ICE Peugeot 208s.

I’ve been driving this Shanghai-made Model Y and it’s clear why it’s popular, if you’ve got about £60,000. The Long Range Dual Motor version had impressive real-world range – 327.5 miles – although its fast-cruising performance was not much better than the competition.

According to JATO Dynamics, Tesla’s market share in Europe this year will be around 1.7%, rising to between 1.8 and 2.1% next year. Last year European sales were just under 12 million.

Felipe Munoz, global automotive analyst at JATO, said Tesla’s sales growth has been impressive despite a slow pace of new launches.

“A big part of the growth posted by any car brand comes from its ability to bring new cars to the market. The last time Tesla introduced an all-new model was in January 2020 when the Model Y production started in the U.S. So, during almost three years, the brand has not come up with anything really new. The focus instead has been on opening new factories around the world to supply the local demand,” Munoz said in an email exchange.

Redesigned Model 3
Tesla is reportedly launching a redesigned Model 3 this year. The top of the range “S” was updated last year and the big “X” SUV with the gull-wing doors has also been improved.  Next year may well see the emergence of the Cybertruck and Roadster, neither of which would be much more than niche sales performers. That requires a bold new small car, priced at around $25,000, which Musk has talked about in theory and has sometimes sounded enthusiastic, and other times less so.

Investment bank UBS put it this way in a recent report.

“Tesla’s CEO recently confirmed the company is working on a next-gen platform for smaller electric cars. This new platform’s main focus would be on halving costs and achieving volumes higher than all other models combined,” UBS said 

As more competition arrives, Tesla needs to respond.

“The “wow effect” of the Model 3 and Y soon fades as they get old, and the competition gets tougher and more appealing. I believe that it will be the case over the next years, particularly at the German premium brands, Volkswagen and some Chinese newbies like NIO, Xpeng, Polestar and other mainstreams like MG. They are launching a lot of new cars that are not as competitive as the Teslas, but are closing the gap,” Munoz said.

Geely of China-controlled Volvo and its subsidiary Polestar, and SAIC of China-owned MG have dominated the first incursion of Chinese produced electric car sales into Europe. But Europeans are going to have to get used to some other new names as well like Aiways, BYD, and Great Wall.

Elbowed out
Schmidt Automotive Research analyst Matt Schmidt said logistics is another factor which might inhibit Tesla’s sales in Europe and its ability to compete with the Chinese opposition. Tesla’s may be elbowed out of the queue for access to shipping transport limited to Europe.

“An increasing number of Chinese (manufacturers) are shipping to Europe, causing “logistical hell” for Tesla, as these brands use the same limited RoRo (roll on roll off) shipping capabilities. This could tame Tesla’s European expansion while the Chinese enter the same sector as Tesla, such as NIO, will begin their European push in 2023 in full,” Schmidt said.

China is currently the most important player in the global electric vehicles market, but the Germans are catching up. BMW and Volkswagen’s Porsche and Audi will be raising their games too

“From 2025 Tesla will begin to come under pressure from European incumbents making a genuine push with BMW bringing their first genuine models to market based on genuine BEV-only platforms. This is when the real race begins for Tesla. Tesla has a window and they need to make the most of it,” Schmidt said.

Schmidt said the Model Y is stealing sales from the Model 3, and Tesla should definitely go for the “Model 2” small car.

“Data suggests the Model Y is cannibalising Model 3 volumes with no sign on the horizon that another model will likely come to market once the Model Y volumes likely mature in 2-years. If Tesla wants to continue its significant and impressive volume push, it really needs to bring a model below the Model 3 or else they are in danger of plateauing in the next 2 years.

JATO Dynamics’ Munoz agrees Tesla needs to widen its range if it is to succeed long-term in Europe.

“In Europe you need to have a big bunch of small and compact SUVs and hatchbacks to succeed. Tesla is still not present in the big volume segments. Will we see them? The future market share of Tesla in Europe will depend more on the presence in these key segments than on its ability to impress with its technology,” Munoz said.

Tesla Model Y Long Range Dual Motor 
The Model Y provided an outstanding average full battery charge of 327.5 miles from my home wall box, but it shed promised range at an alarming 45% in fast, legal cruising mode for a autobahn rating of 180 miles. That’s behind the Model 3 leader with 239 miles, and the Kia Soul (205 miles). 

It’s hard to explain the difference given the technical similarity with the Model 3. My guess is that because the performance of electric cars is especially handicapped if they have poor drag or streamlining, the much higher profile of this SUV probably accounts for the poor highway range. 


 Tesla Model Y
(*estimated at indicated 75 mph ?Tesla doesn’t reveal battery details)
Electric motor:Dual electric motors
Power:
428 hp
Torque:
574.9 Nm
Gearbox:
single speed
Battery:75 kWh?
Claimed battery range/battery capacity:331 miles (WLTP)
WintonsWorld test range/battery capacity estimate:327.5 miles (327, 328)
WintonsWorld highway cruising range estimate:180 miles
WintonsWorld highway cruising penalty*:- 45%
Charging:250 kW 
Drive:
all-wheels  
Top Speed:135 mph
Acceleration:
0-60 mph 3.5 seconds
Price:£60,490 (after tax and before subsidies) (includes 20” wheels, enhanced autopilot)

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