Model S Market Share (%)

2.0
1.5
1.0
0.5
0.0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

Tesla began sales of Model S in 2012. However, due to a limited production capacity initially, it only sold 2650 vehicles in
the same year. With the production hitting >20,000 cars annually at the end of 2012, Tesla sold close to 22,500 units of
Model S in 2013. Production continued to increase in 2013 and 2014. The company met its target of producing 35,000
vehicles in 2014, but fell short of its deliveries target. In 2014, it delivered 31,655 vehicles.
This translates to a gradual increase in market share from 0.2% in 2012 to a peak of 1.7% in 2019, followed by a gradual
decrease to around 1.1% by the end of our forecast period.
Forecast Rationale
Supporting:
1. LOW OPERATING COSTS – Conventional SUVs and crossovers have high operating costs due to their gas guzzling
nature. The all-electric Model S, on the other hand, has no such costs involved. Combining cost savings from using
electricity as a fuel vs gas as the 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.
2. CUTTING EDGE TECHNOLOGY AND DESIGN – Apart from its all-electric zero emission engine, the Model S boasts a
number of unique features, such as its top quality design, touchscreen control panel, and high end performance (0-60
mph in 5.6 seconds). We expect these features to enable it to compete with well established luxury car manufacturers
such as Audi, BMW, and Mercedes Benz.
3. BROAD PRICE RANGE – The Model S is available at prices ranging from around $60,000 to almost $100,000. This
broad price range will allow it to cater to a wide range of luxury car buyers.
4. INCENTIVES FROM GOVERNMENTS – Many Governments around the world offer incentives to companies offering
green technology. In the state of California, for example, makers of zero-emission vehicles get credits from the state
Government. Tesla's Model S can qualify for these credits if it can get a certain percentage of its users to swap
batteries at Tesla's battery swap stations. In many cities in China, it is difficult to obtain number plates because users
have to enter auctions for a limited number of plates on offer. However, buyers of electric vehicles do not have to go
TREFIS ANALYSIS for TESLA MOTORS

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