My answer is “maybe”, depending on how you measure sales and how the sales of last year’s leaders have increased or decreased. With sales figures 3 to 6 months behind schedule, we won’t know for sure until next year, but I’ll lay out the evidence I found and judge for yourself. The method I used was to look up the best selling vehicles for the past year and then research those models to figure out what I could estimate current sales. For the sake of this article, I’m defining Q3 2022 as right now, not the literal sale on Saturday afternoon when I write the article.
My Tesla Model Y History
I have been a fan of Model Y since I first heard about the product. At first, I didn’t even know why everyone was so crazy about crossovers, so I researched it and wrote this article. In short, people like crossovers because they sit a little higher (which helps people see the road better and helps older drivers get out of the car more easily), have a lot more luggage space than sedans, and generally have a little more ground clearance and four-wheel drive, so you can cover very mild terrains. For these extra features, the cost is a bit higher, the gas mileage is slightly lower, but they still drive (and park) more like a car than a big SUV or truck. It’s a winning combination and it’s becoming increasingly popular around the world.
At the launch of the Model Y, Tesla really downplayed the product to avoid hurting Model 3 sales, but I could tell right away that while most were disappointed that it was just a taller Model 3, it was going to be a big hit — because the Model 3 didn’t need radical redesign, it just needed to be a little taller to accommodate more stuff and the third row to accommodate more people. This article I wrote after the launch explains that I thought the Model Y could compete with 8 different Toyota models (4 Toyota models and 4 Lexus models). I also noticed how it saves Tesla huge development costs.
My family owns two Model Y crossovers and I’d like to talk my other daughter into getting a third, but we’ll see if that happens. My only complaint is that I wish my Model Y had a track mode to make it easier to drift (I seem to remember Elon promising this would come with an acceleration boost, but I haven’t heard anything about this in a while).
Top sellers for 2021 and the first quarter of 2022
To find this, I looked for reliable sources of global data for 2021. I decided to use Felipe Munoz’s analysis of 106 global markets.
From here I knew that the main competitors were Toyota RAV4 and Toyota Corolla. It’s possible that one of the lower-ranked models (other than the Tesla Model Y) managed to overtake the two leaders, but I thought that was unlikely in this environment. It takes about 2 months to collect global sales data, so Q2 data won’t be available until around September 1st, so the latest global data I could find is from Focus2Move for Q1 2022. First quarter In 2022, 215,000 Toyota RAV4s and 275,000 Toyota Corollas were sold.
Second and third quarter global sales estimates for the Toyota RAV4 and Corolla
To estimate Toyota’s sales for the second and third quarters, I read all the manufacturing operations notices on Toyota’s website for the past 9 months. The picture I got from reading the notices is that Toyota would like to produce more cars than it is able to. I guess both Toyota and Tesla sell every car they make. Reading those reports, I estimate that sales in the second quarter will be 2% below the first quarter, and in the third quarter 4% below the first quarter. This is not due to lack of demand, but due to production issues, mainly due to chip shortages, which are mostly caused by Covid. So my estimate for the third quarter is that Toyota will sell 206,400 RAV4 crossovers and 264,000 Corolla sedans. Additionally, Toyota is refreshing the Corolla for 2023, which should boost demand a bit, but could cause some production delays. Demand isn’t really an issue, but production delays would hurt sales, since inventory is very low (at least for Toyota’s business model).
How can Tesla increase global production so dramatically when others can even match last year’s?
Tesla is making huge investments to massively increase production. It seems that Toyota is just trying to get back to its record production of previous years. He seems to be constantly complaining about Covid-19 affecting his suppliers (as it has affected all car manufacturers to varying degrees over the past 2+ years). As Elon has mentioned many times, including on the Q2 conference call, Tesla has 3 advantages over other manufacturers in solving the problem of changing supply.
- As for the chip issues, Tesla has more and better software engineers and they have the ability to quickly rewrite software drivers that allow them to replace one chip with another if original chip availability becomes a serious problem. Tesla also uses smaller, more complex chips and runs many processes on them. In the current chip crisis, modern chips have been less of a problem than the older designs used by many others.
- Tesla is more vertically integrated than most, which gives the company more control. It can shift resources to some extent to optimize production.
- Tesla has planned for years to increase production by 70% or more per year – for years to come. Tesla’s stated target is 50%, but it’s clear the internal target is much higher. Because of this and the fact that Tesla has never canceled a single supplier order (to my knowledge) during the Covid slowdown in the past 2 years, and because of Tesla’s superior financial strength and reputation, suppliers are likely to favor Tesla over others. Assuming that Tesla orders 90% more chips in 2022 than in 2021 and that suppliers only give the company 70% more, and because of the Covid shutdown Tesla can only produce 50% more vehicles (which seems likely), Tesla would probably only stored extra chips (the company will need them soon).
Troy Tesla’s Model Y estimates for Q3 and Q4
I put together this table from Troy’s recent tweet (I subscribed to his Patreon, so I had these figures a few days early, but I can’t share them until he releases them on Twitter).
The last thing to look at is the average selling price. For simplicity, I’ll just use the US base price. Although, I understand that ASP includes options and prices that vary around the world.
- 206,400 RAV4s times $26,975 is $5.6 billion in third quarter revenue.
- 264,000 Corollas times $20,425 equals $5.4 billion in third quarter revenue.
- 224,344 Model Y times $65,990 equals $14.8 billion in third quarter revenue.
As you can see from my research above, Tesla will likely be the best-selling SUV in the world in the third quarter and the best-selling vehicle of any kind by the fourth quarter of this year. In terms of revenue, Tesla already generates about 3 times the dollar sales of these top sellers and that lead will continue to grow as Tesla expects to roughly double Model Y production over the next two years from today’s level!
Disclosure: I am a Tesla shareholder [TSLA]BYD [BYDDY]No [NIO]XPeng [XPEV]and Hertz [HTZ]. But I’m not offering any investment advice here.
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