Launched less than two years ago, Tesla’s Model 3 is already proving a major thorn 81-year old automotive giant Toyota.
According to Electrek, Tesla is responsible for about 50% of the defection rate that Toyota is experiencing in North America. Among the top five cars that buyers of the Model 3 were trading in last year, Toyota Prius was leading.
Per WardsAuto, U.S. sales of the Prius (excluding the subcompact Prius C) declined by 17.7% last year to 79,171 units. At the height of its popularity, over 150,000 units of the Prius used to be sold in the U.S. This compares with slightly over 114,000 Model 3s that Tesla sold in the U.S. last year. The year prior, Tesla had sold 1,000 Model 3s in the world’s second-largest car market.
Tesla has a Formidable Lead in the EV market
Karl Brauer, an analyst at automotive research and vehicle valuation firm Kelley Blue Book, told CNBC earlier this month that the electric vehicle market was now Tesla’s to lose:
Whether it is just sales numbers, whether it is image and awareness and appeal, I think Tesla owns that [the electric vehicle market] now. I think there are plenty of people who wonder if Toyota could or should be further along in the pure electric field.
While the two vehicles are supposed to be environmentally friendly, they are starkly different. The Model 3 is pure electric while the Prius is a hybrid. For a long time, Toyota had bet is future on hybrids and hydrogen-powered cars and has yet to release a pure electric vehicle.
Toyota Eyeing a Piece of the EV Pie After Focusing on Hybrids
Recently, however, Toyota announced that it will launch 10 electric vehicles starting in 2020. Earlier this month, the Japanese auto giant entered a battery joint venture with electronics firm Panasonic Corporation.
With the joint venture, Toyota hopes to reach its goal of electric vehicles it promised two years ago:
We have high expectations for the new company, including – as we aim to deliver ever-better electrified vehicles to even more customers – its role in fulfilling our plans for the popularization of electrified vehicles* (including achieving Toyota annual global sales of more than 5.5 million units of electrified vehicles), which we announced at the end of 2017.
Three Years Since Toyota Sold its Stake in Tesla
Interestingly, while the Model 3 is now posing a serious threat to the Prius, it was only less than three years ago that the two car companies had a development partnership before they parted ways. While severing the partnership Toyota also offloaded a 3% stake it had in Tesla. Toyota had acquired the stake for $50 million.
But despite what should be a crowning achievement, Tesla has had a bad start to the year. This includes announcing layoffs in a bid to stem rising costs. Analysts also expect the electric car maker to record a loss in this year’s first quarter.
Tesla’s stock price has consequently suffered following a string of bad news. Since the year began, the stock has fallen by over 15% from its monthly high of around $350.