13 Potential Tesla Demand Factors (Good & Bad) In Coming Years
With Tesla sales dropping in the 1st quarter, one of the hottest topics of discussion lately has been Tesla consumer demand going forward. How high is it going to be in 2024, 2025, 2030? No one really has a clue. Those who would like it to be really high expect it to be really high. Those who would like it to be low expect it to be low. I feel quite neutral and objective on the matter. I want the world to switch to electric vehicles quickly because that’s critical to stopping global heating and cutting air pollution, but whether those EVs come from Tesla, Ford, Hyundai, Xpeng, Sony, or Apple, I don’t really care. I’m open minded about it, but, clearly, sales are more likely from some companies than others — like Tesla versus Apple. With regards to Tesla, though, I thought it would be useful to list the key factors — good and bad — that could influence consumer demand in the coming years. I’ll start with some of the obvious ones, but I’ll try to be somewhat exhaustive of potential major factors here.
1. Cheaper model availability: Will we get the cheaper, smaller Tesla below the Model 3’s or Model Y’s vehicle class and cost? We don’t really have a clue at this stage, but presumably so, and if so, that could be a massive demand driver. (We’ll call this model the “Model C” for the remainder of this article.) Could this come in 2025 or 2026? Or not until 2027 or 2028? (Or never?)
2. “Model C” demand not all additive, though: While everyone expects a sales boost from the “Model C,” the truth is that if a cheaper Tesla comes to market, that could significantly hurt the sales of Tesla’s current lowest-cost options — the Model 3 and Model Y. If the “Model C” is finalized and revealed at last, what will that do to Model 3 and Model Y sales?
3. Robotaxis: Yes, if Tesla could finally get its “Full Self Driving” capability to a robotaxi-adequate level, that would be massive for stimulating more demand for its vehicles. That could create an unprecedented surge in consumer demand. If, if if….
4. Upgraded Tesla Model Y: We’ve all seen the Model 3 “Highland” now, and it’s a huge improvement over the previous Model 3. Many assume we’ll see essentially the same upgrades in the Model Y, and I’m one of those people. When that new Model Y will be coming out, we don’t know. Between the time it’s announced and it’s being delivered to consumers, an upgraded Model Y could really depress sales. Even right now, many argue that buyers are waiting for the upgrade and Model Y sales are not as high as one would think because of this. I tend to agree, especially since I might be in that boat myself.
5. Slowing word of mouth: It’s possible that word-of-mouth sales that have been core to Tesla’s sales growth in the past dozen years have simply slowed, or shrunk. It’s possible that sales from this core marketing angle have peaked as the friends, neighbors, and family members most receptive to buying a Tesla have done so after a bit of excitement, promotion, and exposure from those of us who got a Tesla first. If that’s the case, that’s a worry. Either way, word-of-mouth sales can’t grow forever, and I think slowing word-of-mouth sales in the next couple of years could really hurt Tesla sales expectations and industry forecasts.
6. Dropping costs, and prices: EV battery costs, supply chain costs, and manufacturing costs are expected to continue dropping for Tesla. The more they drop, the more Tesla can lower prices, and the more people can then spring for a Tesla. Despite some of the negative pressures on Tesla sales mentioned in this article, if the company can continue to drive down costs — perhaps more than any other automaker on planet Earth — then it can potentially grow consumer demand for its vehicles to new heights.
7. Cybertruck cult crusade: The Tesla Cybertruck is a special, unique vehicle. Whether it becomes a big hit with the masses or ends up being a cult vehicle, we really don’t know yet. But keep an eye on the Cybertruck, as it is a key factor for stronger growth in the coming years. In fact, I think its popularity, or lack thereof, could be the biggest consumer demand factor for Tesla in the next year or two.
8. Subsidies: In the US, Tesla could benefit from better subsidies on the Model 3, which isn’t eligible for the full $7,500 tax credit at the moment. Tesla could achieve that by getting batteries from the United States instead of China for the Model 3. Or, US policy could change. But it’s not just about EV subsidies here in the US. In China and Europe, some big subsidies have been getting cut or relaxed. Where subsidies go, car sales follow, and we’re currently in a battle between those who think EV drivers should still get big financial support from the government and those who think EVs such as Teslas are mature enough and shouldn’t get any more subsidies.
9. Elon Musk’s tweeting: Need I say more?
10. Model diversity: Beyond the models discussed above, what if Tesla started selling a van, a “normal” pickup truck, different types of cars, more variations of the Model 3/Y/S/X, minibuses, etc.?
11. Large-scale, effective advertising: Nothing much to say here — if Tesla started advertising on a massive scale, like other automakers do, that could provided Tesla with a notable sales boost. Though, those ads also need to be good and persuasive.
12. Good trade-in offers: There are a lot of Model 3 and Model Y vehicles on the road already. If Tesla can find ways to entice more trade-ins and upgrades (free FSD, free Supercharging, etc.), the company can see a lot more sales in the next few years than if it doesn’t land a lot of trade-ins and upgrades.
13. The competition: Not everything is in Tesla’s hands, and one big factor is the competition. What competing models, especially electric models, are on the market now, are coming to market, or are getting more abundant or more appealing? If a Tesla model has 10 solid competitors whereas it used to have approximately zero, it’s natural that the model is going to have a harder time maintaining a high level of customer demand.
Anything else? What am I missing?
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