Tesla Model Y Passes Perennial Top-Sellers in Global Rankings

BloombergNEF’s prediction that the SUV will crack the top five this year looks spot-on.

| Updated on: Oct 21 2022, 00:28 IST
Tesla Model Y
BloombergNEF estimates that Tesla sold around 200,000 Model Ys in the third quarter of this year. (AP)
Tesla Model Y
BloombergNEF estimates that Tesla sold around 200,000 Model Ys in the third quarter of this year. (AP)

Tesla just followed up a vehicle deliveries report that fell short of expectations with quarterly revenue that also was a bit lower than hoped, disappointing investors looking for a more clear-cut kibosh on debate over whether it's starting to have demand issues.

Elon Musk has a broad target to grow sales around 50% annually. While the company now expects to fall just short of that mark this year, one of its models is climbing toward the top of global sales rankings.

Tesla doesn't disclose the split in sales between its Model 3 sedan and Model Y sport utility vehicle, but given the latter's performance, maybe it should. BloombergNEF estimates that the company sold around 200,000 Model Ys in the third quarter, bringing the total so far this year to more than 500,000. That means the SUV is broadly on pace to hit our estimate, published at the beginning of the year, of almost 800,000 — enough to comfortably place among the top five best-selling vehicles in the world.

The Model Y is passing some household names along the way. Ford, for example, sold around 562,000 F-150 pickups last year. It looks like Tesla's SUV probably overtook the truck in the third quarter and should come out ahead for the full year. While Ford has recently upped its EV game, this change in hierarchy has to be a bit jarring for its executives, one of which publicly mocked Musk in 2018 by noting his company was making roughly the same number of cars in four hours that Tesla was in a week.

To be fair, F-150 volumes are largely limited to North America, while the Model Y is sold globally. Looking at North America alone, the F-150 still dominates the sales charts and probably will for a long time.

Farther up the leaderboard, it's the Japanese that rule the roost. Honda's HR-V, Toyota's Camry and Nissan's Sentra each exceeded 700,000 units last year. It will be a few months before it's clear whether Model Y overtakes these three, but Tesla stands a good chance.

The top three in the world last year went to Honda's CR-V and Toyota's Corolla and RAV4. Topping those is almost certainly a bridge too far for the Model Y this year. With Tesla's factories in Austin, Texas, and outside Berlin continuing to ramp up into 2023, Musk may be able to lay claim to the best-selling vehicle in the world, as he predicted last year.

The Corolla has been a perennial top-seller for many years and regularly clocks in above 1 million units. Passing it won't be easy, especially since the car sells at a much different price point, starting at around $20,000. That's less than a third of the current cost of the Model Y, which begins at around $68,000 in the US. It's not clear if the global auto market can support 1 million sales of a single model at that high a price point on an ongoing basis.

Macroeconomic conditions are also quickly deteriorating, with higher interest rates, falling home prices and stock market turmoil all likely to take a toll on big-ticket purchases. Sales of high-end EV models grew briskly through the pandemic partly because white collar workers kept their jobs, reduced their spending and saw their home values and stock portfolios soar as governments and central banks stepped in with stimulus. The environment is quite different now, and it remains to be seen how the premium segment of the auto market holds up. BMW recently suggested that cracks are starting to appear.

Still, it's hard to overstate how big a deal it is for an EV model to be this high in the global sales rankings. It increasingly feels like a question of when one rises to the top, not if this will happen.

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First Published Date: 21 Oct, 00:28 IST
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