A new survey shows a significant drop in consumer interest in buying Tesla vehicles, and we might know the reason why.
Kelley Blue Book has released its latest Brand Watch survey, and the company claims that it points to “plummeted” shopper interest in Tesla vehicles:
Meanwhile, shopper interest in Tesla plummeted quarter over quarter. Tesla fell to sixth from fifth in the rankings of most-shopped luxury brands, with 12% of all luxury shoppers considering a Tesla – down 3 percentage points from Q2 2022 and notably the largest quarter-over-quarter loss for any luxury brand. Shopping consideration for the Model 3 sedan declined by 10% from the second quarter, and the Tesla Model Y and Model S both fell off the Top 10 most-shopped luxury vehicle list for the first time in two years.
Despite the drop, the Tesla Model 3 remains the third-most-desired vehicle, according to the survey.
The Model 3 is also number one in the luxury category based on the new survey.
But, the more expensive Model Y had a somewhat significant drop in interest in the United States, and that might be explained by the fact that the SUV is expected to qualify for the new federal tax credit starting in January.
While Tesla has dominated the EV market in the United States for years despite being at a disadvantage against other automakers who still had access to the $7,500 federal tax credit for electric vehicles, the impact of getting access back was expected to be felt more strongly as we get close to the new incentive.
Vanessa Ton, senior research and market intelligence manager at Cox Automotive, commented on the new report:
The third quarter also saw a noteworthy drop in consideration for Tesla, which could have been caused by a number of factors. Increased competition from other automakers offering more new electric vehicles, price hikes and a lack of new products all may have contributed to Tesla’s considerable decline. However, we have seen Tesla’s shopping numbers drop before and they always eventually rebound. It will be interesting to see if they rebound more slowly or quickly this time around.
Tesla CEO Elon Musk was recently asked about allegations that Tesla is seeing demand going down, and the CEO reiterated that he doesn’t see demand being a problem for the foreseeable feature.
I think demand slowing down at least some in the United States right now makes sense – especially for the Model Y, which should fully qualify for the tax credit.
Tesla has done extremely well without it, but it has a different effect when it is about to become available. People who would qualify for it will think twice about buying right now if it means that delivery could happen this year and they would miss out on $7,500 in tax credit.
But as Ton said, Tesla’s demand always bounces back, and this time, it should be a big one in the United States once the incentive is in place.