My answer is “maybe” depending on how you measure sales and how the sales of last year’s leaders have increased or decreased. Since sales figures are 3 to 6 months behind, we won’t know for sure until next year, but I’ll present the evidence I found and you can decide for yourself. The method I use is that I look at the best selling cars from last year and then research those models to see if I can predict current sales. For the sake of this article, I’m defining the third quarter of 2022 as current, not literal sales as of the Saturday afternoon I wrote the article.
My History with the Tesla Model Y
I’ve been a fan of the 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 post. In short, people like crossovers because they sit a little higher (which helps people see the road better and makes it easier for older drivers to get out of the car), has more cargo space than a sedan, and generally has a little more room. clearance and all-wheel drive, so you can do very smooth off-roading. The cost is slightly higher for these extra features, the fuel mileage is slightly lower, but they still drive (and park) more like a car than a large SUV or truck. It’s a winning combination and it’s becoming more and more popular around the world.
At the launch of the Model Y, Tesla really played down how big the product would be so as not to hurt Model 3 sales, but I can tell right away that while most will be disappointed that the Model 3 is longer, it will be a big hit. The Model 3 didn’t need a radical redesign, just a little taller to hold more stuff and a third row to hold more people. This post I wrote after the unveiling explained how I thought the Model Y could compete with 8 different Toyota models (4 Toyota models and 4 Lexus models). I also noted that this saves Tesla a huge amount of development costs.
My family has 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 the Model Y had a track mode so I could drag it easier (I seem to remember Elon promising that it would increase acceleration, but I haven’t heard anything about it in a while).
Top sellers for 2021 and the first quarter of 2022
To find out, I searched for reliable sources of global 2021 data. I decided to use Felipe Munoz’s analysis of 106 global markets.
From here I knew the main contenders were the Toyota RAV4 and the Toyota Corolla. It’s possible that one of the lower-end models (other than the Tesla Model Y) could overtake these two leaders, but I found it unlikely in this environment. Global sales figures take about 2 months to compile, so Q2 figures won’t be available until around September 1st, so the latest global figures I could find were from Focus2Move for Q1 2022. First quarter 2022 Toyota RAV4 sales in 2022 were 215,000 and Toyota Corolla 275,000.
Second and Third Quarter Global Sales Estimates for Toyota RAV4 and Corolla
To estimate Toyota’s sales for the second and third quarters, I read all the manufacturing operation notices on the Toyota website for the past 9 months. The impression I get from reading the notices is that Toyota wants to make more cars than it can handle. I guess both Toyota and Tesla sell every car they make. After reading those reports, I estimate that sales in the second quarter will be 2% lower than the first quarter and 4% lower than the first quarter in the third quarter. This is not due to lack of demand, but due to manufacturing issues, mainly chip shortages due to Covid. So my estimate for the third quarter is that Toyota will sell 206,400 RAV4 crossovers and 264,000 Corolla sedans. In addition, Toyota is refreshing the Corolla for 2023, which should boost demand slightly, but could cause some production delays. Demand isn’t really a problem, but production delays can hurt sales because inventories are so low (at least for Toyota’s business model).
How is Tesla able to increase global production so dramatically when others can even match last year’s production?
Tesla is making huge investments to massively increase production. Toyota seems to be trying to get back to the record production of previous years. They seem to be constantly complaining about how Covid-19 is affecting their suppliers (as it has affected all automakers to varying degrees over the past 2+ years). As Elon has pointed out multiple times, including on the Q2 conference call, Tesla has 3 advantages over other manufacturers when it comes to dealing with supply shift issues.
- For chip problems, Tesla has more and better software engineers and the ability to quickly rewrite software drivers that allow one chip to be replaced with another if the availability of the original chip becomes a serious problem. Tesla also uses fewer, more complex chips and runs multiple processes on them. In the current chip crisis, modern chips have caused less trouble than the older designs used by many others.
- Tesla is more vertically integrated than most, giving the company more control. It can change resources to some extent to optimize production.
- Tesla has been planning to increase production by 70% or more per year for years – for years and years. Tesla’s reported target is 50%, but apparently the internal target is higher. Because of this, and because Tesla hasn’t canceled any supplier orders (to my knowledge) during the Covid slowdown over the last 2 years, and because of Tesla’s superior financial strength and reputation, suppliers are likely to favor Tesla over others. Assuming Tesla orders 90% more chips for 2022 than 2021, and suppliers only give the company 70% more, and Tesla can only build 50% more cars due to the Covid shutdown (apparently), Tesla , will likely hold additional chips. the company will need them before long).
Troy Teslike’s Model Y Estimates for the Third Quarter and the Fourth Quarter
I put this table together Troy’s last tweet (I subscribe to his Patreon, so I had these figures a few days ago, but I can’t share them until he posts 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 RAV4 times $26,975, $5.6 billion in Q3.
- 264,000 Corollas times $20,425 comes to $5.4 billion in Q3.
- 224,344 Model Y times $65,990, equals $14.8 billion in Q3.
As you can see from my research above, Tesla will be the best-selling SUV in the world in the third quarter and the best-selling car of any kind in the fourth quarter of this year. As for revenue, Tesla is already generating nearly 3 times the dollar sales of these top sellers, and that lead will continue to grow as Tesla nearly doubles Model Y production from today’s levels over the next two years!
Disclosure: I am a Tesla shareholder [TSLA]BYD [BYDDY]Nio [NIO]XPeng [XPEV]and Hertz [HTZ]. But I am not giving any investment advice here.
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