232 500 plug-in vehicle have been delivered in the first nine months of 2018, an increase of 63 % compared to the same period of 2017. 63 % were pure electric (BEV) and 37 % were plug-in hybrids. The plug-in share of the total light vehicle market was 1,8 % to date, compared to 1,2 % in 2017. We expect the share to reach up to 3,5 % in December and 2,1 % for the complete 2018.

US sales in Q3 were all about the Tesla Model-3: During the first half of the year, it was still plagued by ramp-up problems and contributed with only 2000 to 60oo units per month. In Q3, it started to meet the sky-high expectations with clearly outstanding market performance. 54 300 units were delivered in Q3, to eagerly waiting US customers; weekly production was in the 4000 to 5000 range. With total plug-in category volumes of 110 500 units in Q3, The Model-3 stood for half of this volume and nearly the entire year-on-year increase in the sector. Growth was 107 % for the quarter.

Tesla is not just shaking up the plug-in vehicle sector. The Model-3 has become a very desirable alternative to well established competitors. A clear break-through and, deeming by the Tesla Q3 financial result, it can be done at a profit.

In August and September, the Model-3 was among the top-5 best selling cars of all categories, including ICEs, with volumes approaching ubiquitous mid-size cars like Honda Accord and Toyota Camry. In the segment with similar size, performance and price (aka Entry Luxury or Mid-Luxury) the Model-3 stood for half of September sales. It sold more than BMW 3&4 Series, Mercedes C-Class, Audi A4/A5, Acura TSX and all others combined. It can be added that the Model-3 has been the worlds best selling plus-in for the last 4 months.

Model 3 among the 5 best selling cars of all categories

The vehicle markets of USA and Canada are close to a 2/3rd light truck and 1/3rd car ratio. The car space is getting all tighter, competition heats up. Ford has even pondered to stop making cars altogether. Tesla approached this hot-pot with a seemingly impossible proposition: A car with a battery as the only power source, from a young, vulnerable company harassed by short sellers. Without a significant customer base, but many fans and a firm belief in its own capabilities.

A few years later and the Model-3 is chasing the four best selling cars in the US sales charts. Cars like Honda Civic and Accord, Toyota Corolla and Camry, household nameplates for US car buyers. At much higher prices than the aforementioned, without rebates, without advertising, distribution still banned in several US states. Hard to believe, harder to predict, but now it’s a fact.

The Model 3 surely gets a head start from 2 years back-log of reservations, the last number released was 420 000 at the end of Q2-2018. After that, Tesla went to the normal ordering process without reservations. A Tweet in July revealed 5000 new net orders per week. Global EV adoption in general, without Tesla and without China, is growing by over 30 % this year and likely the next. It is safe to assume that Model-3 demand will not dry up anytime soon.

And leaving the competition behind

Tesla Model 3 deliveries (finally) took off in July, leaving behind all direct competition. With the exception of the Audi A4/A5, the other segment players are showing sales drops. Mercedes C-Class sales have gone down 28% y-o-y. Even if the declines could be seasonal or model-year introduction related, some alarm bells should ring now. The total market does not grow at the same pace as Tesla and someone has to give. With none of the Model 3 direct competitors offering all-electric versions in the near future, the Fremont-made EV has an open road to rule this segment.

Tesla explained during the recent Q3 reporting that Model-3 buyer’s previous cars / alternative choices do not follow a clear pattern. Buyers traded in from a variety of car segments, often lower priced than the Model-3, indicating that the Model-3 has broad appeal and is highly aspirational. Just as the cars it is outselling now.

Gain and Pain

The list of best sellers show that range is still king in the US: Long range BEVs or plug-in hybrids on the top 6 places. In Q3, the podium positions went all for Tesla. Beside the Model 3 outlandish performance, the Model X continues gaining traction, beating even its direct ICE competitors (Mercedes GLE; Audi Q7) in September. Tesla Model S (-11% YoY) deliveries were likely cannibalised by its new, smaller sibling; to be expected after 6 years in the market.

Two entries among the Top 10  (Honda Clarity PHEV and BMW 530e) became instant successes. The Honda is still ramping up production, so it could be the Best Selling PHEV soon.US sales of the new Nissan Leaf remain sluggish; it needs a better battery. Chevrolet Volt (-14 % YoY) and Bolt (-17 %), are both down YTD, but at least picking up in Q3.

Ford’s plug-in portfolio and sales are fading. With the C-Max Energi out of production and the Focus Electric kept as a slow selling compliance vehicle, it was up to the Fusion Energi to remain present in the market. Unfortunately, it’s sales are dropping fast (-37% on Q3), suffering from the increased competition of younger, better equipped models, like the Honda Clarity PHEV.

Fuel cell vehicles (3 models available) sold 1972 units during the first 9 months, 31% more than January to September last year. We can’s see them reaching the same popularity as plug-ins any time soon nor in the next decade.

Tesla is leading the model and the manufacturers rankings and it is safe to say that this lead will be firmly held by Tesla for years to come. How high can the Model-3 go? Stay tuned.

Just the beginning

Without the Model-3, the market had continued with the previous, leisurely growth. Its arrival is a game changer, raising the bar for plug-ins and ICE cars alike. The real impact on competition will become more visible when sales comprise more recent orders and less reservation back-log.

For 2018, we expect total plug-in sales to reach around 365 000 units this year, 82  % higher than 2017. The plug-in share is likely to reach 2,1 %, which is getting the US closer to other larger car markets in terms of share. For this year we expect Tesla to stand for half of USA plug-in volume and, counting BEVs only, 3 out of 4 will be from Tesla.

The Model 3 weekly production rate is of high interest in this context. The weekly tallies in Bloomberg’s Model-3 Tracker, are still erratic, but they are increasing and stabilising around 5000 units per week. The current bottleneck is in the logistics to get them to the customers. Tesla expressed a target towards 7000/week by the end of 2018. We interpret this as an average, not a sprint peak rate. Based on this, we expect ca 160k units production for 2018.

Reaching the 1st Million

At the end of September the plug-in population was ca 970 000 vehicles on the road. The first million can be celebrated in October this year. This is accounting for 1 % scrapping of totalled, worn-out and otherwise deregistered vehicles per year. Counting cumulative sales, the 1st million was reached in September, already. By the end of 2018 we expect the PEV population to be 1,1 million, nearly twice the number in operation in December 2016.

Our records show that the US stock consists of 260 000 Teslas, 130 000 PEVs with ChaDeMo sockets, 90 000 BEVs with CSS sockets and 420 000 PHEVs, which (except for the Mitsubishi Outlander) do not fast-charge. They use the Type-1 connector for Level 1 & 2 charging, like all BEVs, except Tesla.

Charging logistics remain an obstacle for most EV doubters, esp. when they lack access to charging at home or at work. Convenient and reliable fast-charging is the key to long-distance travelling. Tesla’s Superchargers have a good part in the brands sales success.