Gen III will begin sales in 2017. We expect Tesla to sell around 50,000 vehicles that year, and gradually ramp up to more
than 750,000 units per year by the end of our forecast period.
This translates to a gradual increase in market share from 1.3% in 2017 to a peak of 6.1% in 2020, and grow gradually
to 9.3% by the end of our forecast period.
Forecast Rationale
Supporting:
1. EXPECTED POPULARITY OF THE GEN III – We expect the Gen III to be a very popular car worldwide. According to
CEO, Elon Musk, the car will have a design similar to the Model S, which has been highly commended for its
unique design. Furthermore, the car will be available at a low price, which allows for a much larger customer base
than other Tesla models.
2. LOW OPERATING COSTS – Conventional sedans have high operating costs due to their gas guzzling nature. The allelectric Gen III on the other hand, will have no such costs involved. Combining cost savings from using electricity as
a fuel vs gas as a fuel, business tax savings, shorter commutes (electric vehicles are essentially allowed to use an HOV
lane) and elimination of trips to the gas station, a Tesla user can save up to $700 per month. Tesla's new leasing
arrangement with Wells Fargo and U.S. Bank allows consumers to purchase a vehicle for no down payment (it is
taken care of from the tax saving) and a $500 per month installment. Additionally, after three years the residual value
of the car is guaranteed by the company to be no less than that of a Mercedes S-class, widely considered to be the best
premium sedan on the market. These assurances make the car accessible to a much broader audience.
3. COMPETITIVE PRICING – Tesla has clearly announced its intent to target the mass market with the Gen III. The
vehicle is expected to have a base price of $30,000, which will allow it to compete with other popular vehicles such as
the Toyota Prius and the Honda Accord.
Sources for historical data and explanations can be found on the Trefis.com website (link)
— TOTAL PASSENGER VEHICLE MARKET SIZE —

See our analysis of Total Passenger Vehicle Market Size in the Model S division here.

— GEN III GROSS PROFIT MARGIN —

This represents the gross margin associated with the Gen III.

TREFIS ANALYSIS for TESLA MOTORS

CONTENT@TREFIS.COM

+ 1 617 394 8763

•15