Tesla Model 3: Competition, Market Size and Trade-Ins

First Model 3

Tesla, a relatively small auto manufacturer in terms of production volume, covers its weakness by selling different versions of the same model across a wide price range. Tesla Model 3 Performance edition’s price goes all the way to $80,500 when all the available options are added, and the company is planning to launch a standard battery version with a starting price of $35,000.

Model 3 Price Range: $35,000 (expected) to $8,500

Model 3’s stretched pricing pits Tesla’s lowest priced sedan against these: BMW 3,4,5 and 6 series; Mercedes C Class, E Class and CLS Coupe; Audi A3,S3 to A7,S7.

Apart from the German trio, there are plenty of players in the $35,000 to $80,000 price range, including Lexus, Toyota, Infiniti, Acura, Lincoln and many more.

Tesla Model 3: Market Size

Tesla Model 3 will be primarily competing in the small and mid-size luxury passenger car markets around the world. Tesla plans to begin deliveries of Model 3 in Europe and Asia during the first half of 2019 (left hand drive countries), while deliveries to right hand drive countries are expected in the middle of 2019.

United States

In the United States, the small luxury passenger car segment reported sales of 459,665 units in 2017, while the midsize luxury passenger car segment reported sales of 296,117. A grand total of 755,782 units for the year, a weekly average of 14,534 units.


In China, the premium passenger car segment is expected to account for 6% to 7% of overall auto sales through 2025. In 2017, China reported 28.87 million unit sales. At 6%, the luxury passenger car segment is worth a little more than 1.6 million units annually.


In Europe, sales for the premium mid-size car segment reached 694,030 units in 2017, while the premium large-size car segment reported sales of 422,525 units.

Top Tesla Model 3 Trade-ins in 2018

The top five trade-ins for new Model 3s were The Toyota Prius, the BMW 3 Series, the Honda Accord, the Honda Civic and the Nissan Leaf, the comapany revealed during the second quarter earnings call.

“It’s just interesting that people are trading up into a Tesla, so people are willing to spend more money on a Tesla than the value of their current car,” said Tesla CEO Elon Musk.

Though the Tesla Model 3 competes in the luxury mid-size and small passenger car segments, the trade-ins revealed by the company shows that customers several segments below are buying the car, thereby expanding Model 3’s potential market size.