Examining Changes in Tesla Model 3 & Model Y Production, Pricing, & Sales Splits

I previously reported on the impressive quarterly sales trends of Tesla, with yet another record sales quarter. While Tesla only reports combined global sales of the Model 3 and Model Y, we have estimated and split out individual model sales from the beginning. However, even splitting out individual sales can miss some big stories and nuances that lie deeper beneath the surface.

Tesla Model 3 SR Dominating in USA

Notably, the leading Tesla number tracker and analysis, Troy Teslike, discovered that the Tesla Model 3 Standard Range completely dominated Model 3 sales in the US last year. The emerging explanation for this shift is that Tesla focused on increasing Model 3 Standard Range sales due to constraints in production capacity for the Long Range versions. This suggests that the most important criteria for EV buyers, which is range, influenced the shift in sales. It’s possible that Tesla’s efforts to increase sales of the Standard Range model could be linked to the phaseout of the $7,500 US EV tax credit. Additionally, the company’s price cuts to stimulate more demand may have also played a role in this shift.

Model 3 Standard Range sales in the US increased over time because that’s what Tesla can produce because they don’t have enough 2170 cells to produce more Long Range versions.

In the past, Tesla was focused more on range which is the most important criteria for EV buyers. pic.twitter.com/0jeJfbKMwU

— Troy Teslike (@TroyTeslike) December 21, 2023

It’s also possible that the market’s understanding of the need for range may have evolved, leading to the realization that 200 miles is sufficient for many drivers, especially with access to convenient charging options.

Model Y vs. Model 3 in China

Another interesting trend is the pricing difference between the Model Y and Model 3 Standard Range in China. The Model Y initially cost about $6,000 more than the Model 3 but saw a decrease in the price gap over time. By the end of 2023, their prices were almost identical. This shift in pricing was influenced by the difference in production capacity, with Model Y sales surpassing Model 3 sales, leading to a price reduction for the Model Y to stimulate more demand.

Here is an interesting trend. The chart shows the price difference between Model Y and Model 3 Standard Range RWD in China, in USD. Model Y is more expensive but the gap has shrunk over time.

Model 3 production has maxed out. So, Tesla wants more people to choose the Model Y. pic.twitter.com/a8mRAPTuFX

— Troy Teslike (@TroyTeslike) December 15, 2023

Despite the price adjustments, it seems that the market may have reached its natural limits for the time being in 2023. Any notable changes in 2024 and beyond remain to be seen.