Tesla claims Model 3 is world’s best-selling premium sedan

Tesla has claimed its Model 3 is now the world’s best-selling premium sedan, overtaking long-time BMW 3 Series and Mercedes-Benz C-Class and E-Class ICE-rivals.

The US brand broke its own record for vehicle production and deliveries for a quarter, with 180,338 Telsas made and 184,877 delivered. Of that number produced, all were Model 3 and Model Y. Model S and Model X variants ceased production ahead of the new variants starting to roll down production lines.

The above figures mean a jump of 76 percent on the production front and 109 percent for deliveries over the same quarter last year.

In profit, with a twist

The numbers were released in Tesla’s Q1 2021 financial earnings report that also showed, for the seventh successive month, it had turned a profit. But it hasn’t done so by directly selling cars.

Tesla’s 2021 Q1 net income was US$438 million, but it had made a record US$518 million from regulatory credits from other car companies. These credits are sold to other car makers – such as General Motors and Fiat Chrysler Automobiles (now Stellantis) – which need to comply with fleet emission rules or be stung with hefty fines; paying for the credits is cheaper than the penalties.

It means, rather simplistically, Tesla is losing money on selling its own cars and making money from other car makers. Without those regulatory credits, it’d be operating at a loss. As more car companies bring credit-earning EVs to their line-ups, this rich profit seam for Tesla will ebb away.

Its automotive revenues, while up 75 percent year-on-year, has actually dropped since Q4 of 2020, mainly due to the fact its average price per car has gone down with the pricier (than Model 3 / Model Y) Model S and Model X seeing so few deliveries.

Tesla said it achieved its highest ever vehicle production and deliveries in spite of a number of challenges, including “seasonality, supply chain instability and the transition to the new Model S and Model X.”

On the current microchip supply shortage for car manufacturers, Tesla said “we were able to navigate through global chip supply shortage issues in part by pivoting extremely quickly to new microcontrollers, while simultaneously developing firmware for new chips made by new suppliers.”

Changing of the guard

Tesla’s claim the Model 3 has become global leader in its segment is “based on most recent comparable publicly available OEM data,” and if accurate, is a huge turning point for the long-established premium sedan class.

“About three and a half years into its production, and even without a European factory, Model 3 was the best-selling premium sedan in the world, outselling long-time industry leaders such as the 3 Series and E-Class,” Tesla’s statement said.

“This demonstrates that an electric vehicle can be a category leader and outsell its gas-powered counterparts. We believe Model Y can become not just a category leader, but also the best-selling vehicle of any kind globally.”

Bold claim, and those on Model Y-watch will be buoyed to hear “production rate in Shanghai continues to improve quickly and two new factories – Berlin and Texas – are making progress.” It was also said deliveries of the delayed new Model S should start in May 2021 and Model X by Q3 of 2021.

As for the sales volume outlook, things are looking rosy indeed. Tesla said it expects to achieve 50 percent average annual growth in vehicle deliveries, and in some years it’s expected to be even faster, including this year.