Tesla Model 3 Sales Plummet in January

According to recent reports, sales of Tesla’s Model 3 vehicle in January plummeted by as much as 74 percent compared to sales in December.

The LA Times reports that sales of Tesla’s Model 3 vehicle fell by 74 percent in January 2019 compared to just one month previously in December 2018. In January 2019 the company sold 1,875 vehicles while in December approximately 25,250 Model 3’s were sold.

Tesla reports their sales quarterly with the next report set to be released in April, but the current figures come from consumer website Insideevs which has a track record of actually overestimating Tesla’s sales. The future of Tesla’s success relies heavily on the growth of Model 3 sales; the company sold 145,000 of the cars last year and has plans to sell more in 2019 but fears of a lack of consumer demand have plagued the company in recent months.

Tesla did not comment on the figures from Insideevs but did refer to the company’s recent investors conference call in which Tesla CEO Elon Musk stated: “Most people do not buy a new car in the middle of a blizzard. So, January and February tend to be seasonally low and then it picks up significantly around the early to mid-March time frame.”

The slowing of U.S. sales combined with the company’s recent shift to focus on Europe and China brings into question the future of the Model 3 in the U.S. “Our whole focus is, OK, how do we get those cars made, get them on a ship as fast as possible,” Musk told analysts during a conference call on Wednesday. “… It’s very important to get those cars, especially to China, as soon as possible. We hope the trade negotiations go well, but it’s not clear. But we need to get them there while there’s sort of a de facto — sort of a truce on the tariff war.”

Amidst the company’s cost-cutting measures which included cutting seven percent of its workforce and recent worries about lack of demand for Tesla vehicles, this is quite a large promise. But according to Musk, the demand for Tesla vehicles is “insanely high,” but the cars are just unaffordable for most consumers:

The demand for — the demand for Model 3 is insanely high. The inhibitor is affordability. It’s just like people literally don’t have the money to buy the car. It’s got nothing to do with desire. They just don’t have enough money in their bank account. If the car can be made more affordable, the demand is extraordinary.

But Wall Street analysts are not as confident as Musk is; many are concerned by Tesla’s plans to only produce cars for Europe and China and their expectation of a gap of approximately 10,000 vehicles between production and deliveries due to the number of vehicles in transit at the end of the first quarter. Cowen analysts noted: “This is a strong indication that demand in the U.S. for both the mid-range and long-range Model 3 versions has largely been exhausted, and the company is still working through the estimated ~6.8k of unsold Model 3 inventory.”