Is the 1% going green or just going for the new, new thing?
Among buyers willing to spend close to six figures to get from Point A to Point B, first quarter US sales numbers that show Tesla Motors’ Model S electric sports sedan is outselling by wide margins the Mercedes S Class, BMW 7 Series and the Audi A8.
That doesn’t just boost the Silicon Valley automaker’s bottom line; it’s good for its long-term strategy. While Nissan, Ford, General Motors, Toyota and other manufacturers have been fighting over early adopters of the electric car, Tesla chief executive Elon Musk has been busy taking the concept to the next level, emulating the German ultimate driving machines favored by well heeled doctors, dentists and realtors. (A Toyota representative told Quartz that dentists are the No. 1 buyer of its RAV4 electric sport utility vehicle powered by a Tesla battery pack.) For customers who pay in cash (rather than using Tesla’s recent financing plan), the car is “expensive,” Musk acknowledged on a recent press conference. “It’s available to the top 1% of households.”
The Model S’s sticker price is in the range of its non-electric luxury competitors—between $71,000 and $96,000 depending on the size of the battery pack. But Tesla has an edge. Its luxury vehicle comes with a green discount: Buyers can slice off $7,500 off the purchase price thanks to a federal tax credit. (State rebates let California buyers save a total of $10,000 while West Virginians can shave off $15,000.)
Still, one car does not make for a successful automaker. Tesla will need to get cracking on rolling out its next model, the Model X sport utility vehicle, as well as a more affordable third generation car to keep pace with luxury competitors. For while Mercedes only sold 3,077 S Class land yachts in the first quarter, the company offers a full range of luxury vehicles and sold a total of 75,214 cars in the US in the first three months of the year. Still, Tesla’s one model packs a punch: this morning it had a market cap of $10 billion—one quarter of General Motors.