Luxury EV Sales Outpace Overall Market

By · May 20, 2014

Luxury EV Sales Outpace Overall Market

The overall PEV penetration rates will only grow if automakers pursue more segments and the high costs of batteries today makes moving from the top down a reasonable strategy. Tesla and Chrysler are also eying other potential opportunities for PEVs – the SUV and minivan segments.

The plug-in electric vehicle (PEV) market continued to see strong growth in early 2014, and the high-end segment is likely to expand most quickly during the remaining months. According to data from HybridCars.com, sales of PEVs in the United States grew by 24% during the first quarter of 2014 compared to the prior year and now make up approximately 0.6% of new light duty vehicle sales.

But, if you look at sales from only the luxury vehicle segment, the penetration rate jumps to nearly 3% of new vehicles sold. Nearly all of those sales (94%) came from just one company – Tesla Motors. Two models accounted for the rest of the luxury EVs sold: the Cadillac ELR and the Porsche Panamera S E-Hybrid, both plug-in hybrids.


PEV Market Penetration by Vehicle Type, United States: 1Q 2014

PEV Market Penetration by Vehicle Type, United States: 1Q 2014


(Source: Navigant Research, HybridCars.com, AutoNews.com, Tesla Motors)

PEVs are doing well in the luxury market not only because the Tesla Model S is a great looking and performing vehicle, but also because its target audience is unfazed by its higher price tag. Whereas Chevrolet, Nissan, Ford, and others are asking consumers to spend an additional $5,000 to $10,000 for a comparable looking electric compact or sedan (albeit with more features, such as navigation and telematics), Tesla and the other luxury makers are requiring customers to spend about as much as they normally would. Upselling is always more challenging than asking customers to choose between equally priced options.

Top Down Approach

Navigant Research predicted that the luxury market would be an area of great interest and activity this year as part of our free annual white paper, Electric Vehicle Predictions: 10 Predictions for 2014. Tesla, which reported sales of 6,457 vehicles during 1Q in its recent quarterly filing, continues to thrive, but competition is coming. (Tesla does not identify how many of its vehicles were sold outside of the United States separately, so the PEV percentage in the United States is slightly inflated.)

Until recently, the only other luxury options have been the Cadillac ELR and Porsche Panamera S E-Hybrid (the Fisker Karma was also briefly on the market). However, BMW will soon have two models available, and Mercedes just announced an aggressively priced battery electric vehicle. And, within a year, Audi and Volvo will also be in the mix with new PEVs for sale in the United States.

While the styling from some of the luxury PEVs may not mirror their internal combustion engine counterparts, the interior creature comforts and vehicle performance will tempt consumers who are interested in avoiding paying more at the pump. The rapid expansion of luxury PEV models available should enable the segment to stay well ahead of the overall PEV market penetration for the foreseeable future. We can expect even more luxury PEVs to be announced before the year is over.

The overall PEV penetration rates will only grow if automakers pursue more segments and the high costs of batteries today makes moving from the top down a reasonable strategy. Tesla and Chrysler are also eying other potential opportunities for PEVs – the SUV and minivan segments.

If you’d like to hear more on the future of electric vehicles, I’ll be speaking at the Electric Drive Transportation Association annual conference on May 20 in Indianapolis.

Comments

· · 9 weeks ago

That is NOT exactly accurate in terms of "reasons" behind this.

Tesla doesn't have much price premium over a comparable performance ICE cars so it sells well.

If Tesla and other car manufacturers can produce an ICE equivalent midsize family sedan at similar price with superior performance, then it would sell very well also. That is why Gen III Tesla will prove that case.

LEAF and Volt are NOT superior to ICE (simillar size/range class) in their performance. Volt is closer to its ICE counterpart where LEAF is much worse in performance.

So, if anyone can produces a 200 miles BEV that does sub 7 secs in 0-60mph and similar to a Camry or Accord with a price tag of $25K to $35K, it would sell like hottest thing on the market.

· · 9 weeks ago

The analysis is supposed to be about PEV sales in the U.S. Nevertheless, Mr. Gartner is accounting for global Model S sales, of which over 3,000 were sold in Europe during 1Q 2014 and a couple of hundreds in Canada, leaving the American market with about 3,200 units. Therefore, the share of the luxury segment in the U.S. is actually about 1.5% not 3%.

· · 9 weeks ago

... the interior creature comforts and vehicle performance will tempt consumers who are interested in avoiding paying more at the pump.

This seems like an odd remark. As a rule, people buying luxury vehicles are not particularly concerned with the cost of fuel. After all, if the price is the point, why not buy a sub-$50k vehicle (you can get rather nice once that perform adequately) and use the remaining ~$50k to buy ~10,000 gallons of fuel which will net you ~200k miles or more?

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