Tesla's 2 cheapest vehicles could dominate its 2 most expensive ones this year

Mark Matousek

Jan 30, 2020, 04:37 IST

Tesla's 2 cheapest vehicles could dominate its 2 most expensive ones this year

Hollis Johnson/Business Insider

A Tesla Model 3.

Sales of Tesla's two lowest-priced vehicles could dominate its two higher-priced vehicles this year.
Tesla said on Wednesday that its factories could make up to 550,000 Model 3s and Model Ys this year, compared to 90,000 Model S and Model X vehicles.
The Model 3 starts at $33,990 and the Model Y starts at $52,990, while the Model S and Model X start at $79,990 and $84,990, respectively.
The Model 3 accounted for 82% of Tesla's sales in 2019, up from 59% in 2018.
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Tesla's production capacity for its Model 3 sedan and upcoming Model Y SUV could result in the vehicles dominating the electric-car maker's sales mix this year.

The company said on Wednesday that it has the capacity at its Fremont, California, factory to make up to 400,000 Model 3 and Model Y vehicles, combined, this year, compared to 90,000 Model S sedans and Model X SUVs. Tesla says it also has the capacity to make up to 150,000 Model 3s this year at its new factory in Shanghai.

The Model 3 starts at $33,990 and the Model Y starts at $52,990, well below the Model S and Model X, which start at $79,990 and $84,990, respectively.

Based on its production capacity, the Model 3 and Model Y could account for a significant majority of Tesla's 2020 sales. After setting a sales record of 367,500 vehicles last year, the company said it expects sales to "comfortably exceed" 500,000 this year. The Model 3 accounted for 82% of Tesla's sales in 2019, up from 59% in 2018.

Preparations for Model Y production are ahead of schedule, Tesla said, with the first deliveries set to begin by the end of March.

While a further shift toward less expensive vehicles will likely dent the profit Tesla makes on each one, higher volumes and a more efficient production process could offset that effect, leading to higher overall profits.

While Tesla has not yet made a profit over a 12-month period in its 17-year history, its 2019 results represented an improvement over 2018. During 2019, Tesla lost $4.92 per share on revenue of $24.6 billion, compared to a loss of $5.72 per share and revenue of $21.5 billion in 2018.

And Tesla's 2019 fourth-quarter earnings beat analysts' estimates. While analysts expected an adjusted profit of $1.74 per share and $7.1 billion in revenue, Tesla made $2.14 per share on revenue of $7.4 billion.

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