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. Follow @antonwahlman This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
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