Tesla is getting closer to its ultimate goal of producing its first mass market electric car, the Model 3. But there is one glaring problem: Consumers aren’t buying sedans, they’re buying crossovers and SUVs.
Passenger car sales fell over 12% in August, while truck and SUV sales rose 2%, according to the firm Autodata. As a whole, though, passengers sales have been on the decline for a while.
As Business Insider’s Matt DeBord recently pointed out, the value of used small cars is cratering, which means the price of new passenger cars is also falling.
Major automakers have taken note and are largely moving away from sedans or coups and heavily investing in bringing more crossovers and SUVs to market. The move makes sense considering consumers want these larger vehicles and because these larger cars are way more profitable than smaller passenger cars.
Now, Tesla already offers its Model X SUV, but it’s a $100,000 car, which is way out of reach for most people. But CEO Elon Musk announced in July that Tesla has plans to bring an affordable compact SUV, called the Model Y, to market, as well as pickup truck in the future.
The company, though, must first get the Model 3 out the door — and, well, that could take a while.
The electric car maker has about 370,000 orders for the Model 3, which is priced at $35,000 before tax incentives, and aims to begin production of the vehicles by the end of 2017. But Musk has hinted that the bulk of Model 3 orders won’t be delivered until 2018. What’s more, Tesla has not yet given a firm timeline of when to expect the Model Y or a pick-up truck.
But one thing is for certain, by the time Tesla does roll out an electric SUV or crossover, it will already have some intense competition.
General Motors is planning to roll out its all-electric Bolt crossover by the end of this year, which is priced at about $37,500 before tax credits. Audi and Hyundai are also both planning on rolling out an all-electric SUV by 2018.
Volvo aims to offer at least two all-electric vehicles by 2019, one of which is expected to be a crossover or SUV. Volkswagen is planning to offer five electric vehicles by 2020 and more than one of those is likely to be a crossover or SUV of some kind. And Mercedes is expected to showcase an electric SUV at the Paris Motor Show this October that is expected to go into production by 2019, according to a report from Electrek.
Despite the competition, Tesla’s Apple-like brand power could always keep consumers loyal until the company launches its affordable SUV, whenever that may be. Until then, though, Tesla is squarely focused on delivering its Model 3 so it can hurry up and get to the real money maker, the Model Y.
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