To The Moon

Tesla seems to be at the forefront of commanding headlines: why isn’t the brand commanding the same interest from luxury car buyers?

Just as Tesla is at the top of the news cycle, demanding more attention than any automaker in recent years, then it would be a given that demand would be so undeniably high that the brand would top the list of consideration for every car buyer — particularly those that can afford the rising prices.

Yet, that hasn’t been the case recently among car buyers.

Kelley Blue Book found that just 12% of luxury car shoppers considered a Tesla vehicle in the third quarter of 2022. This represents a reduction of 3% compared to the previous quarter.

There can be a lot of reasons to explain such a drop, and it may also correspond directly to a recent 52-week-low for Tesla’s stock price.

The most important attribute to note is that Tesla Model 3 is the only electric vehicle on Kelley Blue Book’s list of the top 10 most-considered vehicle models, coming in at the third spot.

Surprisingly, Model Y didn’t make the list nor did the rest of Tesla’s vehicle lineup despite being what we would consider Tesla’s most popular current vehicle.

As far as the luxury segment, BMW was the most-considered brand appealing to 22% of shoppers. Tesla took the sixth spot between Mercedes-Benz and Acura.

It’s not a matter of affordability either as luxury car shoppers valued durability/reliability above all else. The same media shining a spotlight on Tesla can also yield negative press that magnifies issues that may not be common to all owners, but tends to paint Tesla in a light that makes its vehicles appear to be less reliable.

Safety came in next in the considerations most important to new luxury car buyers, which should theoretically give Tesla an advantage as its vehicle lineup is rated to have the lowest probability of injury. But most models from the top luxury automakers are able to attain 5-star ratings by the agency’s standards.

Driving comfort was preferred over driving performance, giving preference to what’s viewed as the luxury ride of Cadillac or Mercedes-Benz over Tesla’s vehicles which are sporty at all trim levels but comparatively lacking in some luxury features according to experienced buyers.

Oddly, luxury buyers continued not to cite fuel efficiency as a top concern after excluding it from their consideration in the second quarter of the year for the first time ever when gas prices reached record levels.

This should all be concerning to us, but we think there are a few key areas Tesla needs to focus on to appeal to luxury buyers. This includes offering more high-end features on Model 3 and Model Y, even if electric is inherently luxurious, and making Model S and Model X more immediately-available for buyers that demand all of the brand’s most advanced features.

But really a large part of luxury is about perception, and Tesla could stand to reinvigorate its product offerings. Cybertruck should play a role in that next year, as a unique offering that’s high-tech enough to simultaneously be considered luxurious.

There’s also not the same level of marketing, and unless luxury buyers are looking for the eco-conscious image associated with Tesla then they may still be swayed to stand out and look elsewhere as Tesla’s are becoming perhaps a bit too ubiquitous in areas like San Francisco.

Tesla can continue building excellent products and offering a key advantage above other electric vehicles with its Supercharging Network, but it may not be enough anymore to persuade a majority of luxury buyers.

The revelation that should be realized is that Tesla wasn’t created as a luxury brand, but rather as one whose price has been dictated by the high cost of its technology.

Even so, it’s not a concern that Tesla is falling out of favor among luxury buyers as it gives Tesla a large subset of buyers to appeal to with future vehicles and technologies: Full Self-Driving should be viewed as luxurious in itself.

Tesla needs to capture the attention and spirit that luxury buyers are looking to attain, or otherwise shift its focus on the future of a large market with high-volume ambitions.

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