Is Tesla Model three The Next Toyota Camry?

Editor’s Note: I’ve been planning to write an article about these two cars for a while, so it’s nice to get a bump from Loup Ventures, which has strike me to it! Check out Matt’s summary of the analysis below.

We recently profiled Gene Munster, one of the most revered Wall Street analysts covering Apple. Munster has a five starlet rating and ranks a stellar twenty one out of Four,592 analysts on Peak Ranks (99.5th percentile). Lately, he’s been showcasing up on the financial networks discussing his outlook for another tech innovator, Tesla. His company, Loup Ventures, argues in its most latest research report that the “Model three could switch the world.” Munster chose a surprising car to stack up against the Model Trio. No, not the Chevy Bolt — the Toyota Camry.

Above: Tesla Model three release candidate spy photo (via reddit, Fewwordsbetter)

For fourteen years running, the Toyota Camry has been America’s best-selling car. That said, Loup Ventures compared the Model Trio’s total cost of ownership with the Camry “because it’s a good example of an affordable quality car sold in the U.S. At very first glance, Camry is in a different segment than the Model Trio, given that a Camry costs an average of 42% less than an average Model three and Camry is an ICE (internal combustion engine). However, looking at total cost of ownership, the price gap closes based on savings from fuel, insurance maintenance, and repairs, ultimately yielding a 13% price difference over five years.”

Above: Munster pits the Model three against the Camry (Source: Loup Ventures)

The Model Three’s lower cost of ownership could permit Tesla to tap into a thicker market than ever before. Munster concludes, “Wielding a Model three is only 13% more expensive than possessing a Toyota Camry over a five year period…. [so] based on our cost of ownership work, we believe the Model three expands Tesla’s addressable market to about 11m vehicles per year in North America alone.” Could this mean mass market success for Tesla? “If Tesla captures 25% of this eleven million vehicle addressable market by 2025, Tesla would generate $105 billion in annual revenue from the Model Trio.”

Above: Tesla store in Seoul, South Korea (via Instagram, kunikuku_kung)

With a smaller-than-expected price difference, which car is the better value? “Tesla wins over a Camry when it comes to customer practice, due to its acceleration, Autopilot, elimination of gas station stops, and the high-quality entertainment system. There is evidence of this in a Consumer Reports survey, where 91% of Tesla owners state they would ‘certainly’ buy their cars again, the highest rating of any automaker. The next two closest automakers were Porsche at 84% and Audi at 77%.” Meantime, Toyota came in 5th place with 76%.

Above: Consumer Reports latest ‘Car Brands Ranked by Holder Satisfaction’ results (Source: Consumer Reports)

And don’t leave behind the viral nature of Tesla ownership: “As more Teslas find their way onto the road, the general public will become increasingly aware of the benefits of Tesla ownership and likely view the 13% total cost of ownership difference as insignificant. We expect this ‘see it and want it’ phenomenon to cause an acceleration in Model three request.” This, in turn, could open up the coveted Tesla brand to the masses. Munster predicts, “the Model Three’s value, in combination with its technology, has the potential to switch the world and accelerate the adoption of electrical and autonomous vehicles.”

Above: Tesla Model three in front of a Model X at the factory (via instagram, everything.tesla)

As Tesla’s Autopilot is perfected, Big Auto will be left behind: “Detroit, Japan, and German car manufacturer feature shortfalls will compound around the end of two thousand twenty when Tesla adds autonomy to approximately two million Teslas on the road virtually overnight… Note that every Tesla sold today has the hardware for utter autonomy. When Tesla turns on total autonomy, we believe the market will peak away from traditional autos to Tesla.” A journey down memory lane might be in order — perhaps Apple vs. Nokia could soon resemble Tesla vs. Toyota.

Above: Munster thinks Model three could be the iPhone of cars

As before, Munster draws a corollary inbetween Apple and Tesla. Apple, once seen as a niche and pricey brand, now loves massive mainstream success. The iPhone was what shoved Apple out to a universal audience. And Munster forecasts, “we will eventually look back at the launch of the Model three and compare it to the iPhone, which proved to be the catalyst for the shift to mobile computing. … Looking back at the iPhone in two thousand seven it was a spread to envision the company producing 50m phones a year, but in 2015, the company sold 232m units.”

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