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Tesla Nabs 8% of the U.S. Luxury Car Market

As if Tesla’s (NASDAQ: TSLA ) 280% stock price increase since the beginning of 2013 or becoming profitable in Q1 of this year wasn’t enough, the Electrification Coalition released a report last week stating that Tesla’s Model S made up 8.4% of the U.S. luxury automotive market in the first six months of the year.

In the first quarter of this, year Model S sales outpaced Audi A8, BMW 7-series and Mercedes S Class sales. But what’s really striking about the comparison is that Tesla is a young car company and its Model S has been selling for only about 14 months, while BMW has sold its 7-series since 1977 and Audi’s flagship A8 launched back in 1994.

Tesla Model S. Source: Tesla.

Part of Tesla’s success is due to the acceptance of plug-in electric vehicles, or PEVs, among U.S. consumers and an overall bounce back in automotive sales. We first saw evidence that the U.S. luxury auto market was coming back in 2011, with spikes in sales from BMW and Mercedes. Meanwhile, the PEV business has seen more than 110,000 U.S. vehicle sales since the beginning of 2011 — including cars from Tesla, General Motors, Nissan, Toyota, and others.

Topping off Tesla’s solid PEV and luxury position is that PEV sales have been twice as high in their first two years than hybrid vehicles were in the first two years after that market’s initial launch — a trend that could certainly continue to benefit Tesla.

But Tesla has bigger aspirations than just tackling the luxury or PEV market. Tesla CEO Elon Musk has been very vocal about introducing a $30,000 car for the masses by 2016. To achieve that goal, the company will need to significantly decrease the cost of its batteries. That’s why the latest information form the Electrification Coalition is so important. The group expects battery costs to drop by almost half by 2020.


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