Tesla sales surge in the first quarter of 2021

Tesla has recently seen a surge in demand for their electric vehicles, despite them being more expensive compared to their petrol and diesel counterparts with the average price of a Tesla sitting at $49,100.

Tesla claims that in their first financial quarter they delivered 185,000 vehicles despite the chip shortage which hit the vehicle manufacturing industry.

This figure is double of last years sales, additionally, the delivery count outperformed Wall Street estimates which were at 168,000. (January to March)

These new numbers have increased the confidence and attitudes which investors have towards Tesla thus causing a spike of 7% in the share price of the car company.

As well as investors, analysts are also confident in Tesla’s future performance and some say that if this trend continues, Tesla will sell a total of 850,000 vehicles this year, quite a large jump from 500,000 which was last years figure.

So why has the demand for electric vehicles from consumers exploded despite reductions in income due to the pandemic?

Well, let’s examine why the reductions in income during the pandemic have not had a relevant impact on Tesla’s sale performance.

The workers who have seen large reductions in income, either from being laid off or from the Furlough Scheme, which only subsidised 80% of the wage, have primarily come from industries such as tourism, catering and hospitality and retail.

These industries typically have a large supply of labour, this is because many people can do the work within it, so, due to this large labour supply, wages are forced to be low.

Hence, because of the already low wages, these workers were never the target audience for Tesla’s, they likely simply cannot afford to buy one, and, ones who can, are more likely to purchase more cost-effective vehicles such as petrol and diesel.

Additionally, due to their lower wages compared to other industries, these people may not have as much of a disposable income and savings, meaning that in a pandemic, it is more important for them to hold on to their money and to buy essentials rather than splashing it all on a fresh new car which has the perk of driving itself.

So, because these workers were unlikely to purchase teslas in the first place, their reduction in income has had no real effect on the sales of Elon’s electric cars.

But why has demand increased? Well, we can look at workers on the opposite end of the spectrum, those who typically earn higher wages and who have been kept in work.

The majority of households have saved during the pandemic, this is because consumer confidence has understandably decreased because of the virus. Nobody can really be confident if they are going to keep their job, and, because of this, the propensity to save of consumers has increased.

However, now that the economy is starting to open up again with vaccination rollout, consumer confidence is once again rising.

Because of this, the pent up consumer saving is bound to be spent on something.

So, the workers who are on higher-income rates who have saved enough to buy a car, have likely splashed some of those savings on upgrading their car to a Tesla as a treat.

This combined with the growing awareness around climate change is likely why the demand for Tesla’s has increased so much in the first economic quarter, consumers are simply much more confident and they are beginning to spend on luxuries.


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