This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Tesla: 100% Market Share in Silicon Valley

The $100,000-ish Tesla Model S competes primarily with other $100,000 luxury sedans. What does that mean? It means Mercedes S550 and BMW 750. That's the market segment. A $100,000 luxury sedan doesn't compete with a $40,000 car or a $20,000 car.

So the critical question is this: In the seven or so months since volume production began, what has happened to Tesla's market share in its target segment?

One way to find out is to count these new cars on the street. When you buy a brand-new 2013 model-year car, you get a dealer document that's pasted to the front window, which you exchange for the final license tags within 60 or so days.

As it happens, the last 60 or so days is the relevant time period for Tesla anyway, in this case. So this makes the case easy.

On the average day in the last month or two, I have seen at least a dozen Tesla Model S cars on the streets while hanging out in Silicon Valley -- every day -- increasing in frequency every few days.

The key point here is: How does this compare with Tesla's main competitors, the Mercedes S-class and the BMW 7-series?

In the last two months, I have not seen a single brand-new Mercedes S class or BMW 7 series. Not one. That's compared to at least a dozen brand-new Teslas every day.

You know what conclusion I draw from this? In a matter of only a few short months, Tesla has gone from 0% market share to 100%. Not 99%. 100% -- in these parts of Silicon Valley anyway.

I can hear the complaints and objections already. "That's anecdotal. Not enough sample size. You didn't look at every street 24/7. BMW and Mercedes sell their flagships somewhere."

The complainers would be right. But I'm also right. I'm not making this up. I'm only doing what analysts in New York are doing when they comment "When I ride the N.Y. subway, the only tablet I see is the iPad, no Android" -- or whatever the comparison may be.

What is the moral of this story? It is this: By my own account as an extremely observant car nut, Tesla now has 100% market share in its "home" market of some part of Silicon Valley. The fair climate makes it an ideal place for an electric car, but 100%? Seriously? Tesla isn't banking on getting even 20% of the $100,000 luxury sedan car market.

In other words, if Tesla can quickly get to 100% market share in Silicon Valley -- where over a million people live -- perhaps it can get to 50% or whatever other decent number somewhere else. Even 10% would be heroic. If Tesla gets anywhere close to a double-digit market share number, it will have been an epic success.

As of today, there probably aren't much over 5,000 Teslas on the road -- in the whole world. But it took only a few hundred of them to prove to me that Tesla is getting to 100% market share at its geographical tip of the spear -- Silicon Valley.

The beauty of an uneven distribution in the earliest phase of deploying a new product is that we can see much further into the future in at least some corner of the market. For Tesla, that future is in its home market, and Tesla's competitors -- BMW 7-series and Mercedes S-class -- had better watch out because the air just went out of their sales balloons.

"Tesla already got to 100% market share" -- now that's a headline you can take to the bank, unfair as it may be.

At the time of publication the author had a position in TSLA and AAPL.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
3 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $112.12 0.00%
TSLA $220.69 0.00%
FB $93.24 0.00%
GOOG $643.61 0.00%
YHOO $32.52 0.00%


Chart of I:DJI
DOW 17,084.49 +33.74 0.20%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,830.47 +19.6820 0.41%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs