Owners of Tesla electric vehicles are the most brand-loyal in the industry, but they do face limited choices with the automaker's current four-vehicle lineup of two sedans and two crossovers.
The Cybertruck pickup, which is expected to launch in the coming weeks, could provide some needed variety, according to S&P Global Mobility, which tracks Tesla loyalty data.
"Cybertruck is vital to keeping Tesla fans within the brand, along with other products to expand the portfolio," said Kent Chiu, associate director of consulting services at S&P Global Mobility.
"The Cybertruck, a second-gen Roadster and a vehicle positioned below the Model 3 have all been promised and should migrate existing owners up or perhaps sideways within the brand," Chiu said in a Sept. 13 blog post. "Now, Tesla needs to get them to market."
The Model 3, starting at $41,880 with shipping, is Tesla's most inexpensive model.
High numbers
Tesla's overall loyalty rate is 68 percent, meaning just 32 percent of owners leave the brand to buy a new vehicle, S&P Global said. But when Tesla owners specifically purchase a new battery-electric vehicle — not a gasoline or hybrid model — that loyalty rate rises to 90 percent, a big number as the industry shifts to EVs.
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Tesla will have about 60 percent of the EV market through the third quarter of this year, according to an estimate Tuesday by Kelley Blue Book.
The automaker's CEO Elon Musk "has succeeded in creating this image of a brand that's seen as very, very leading edge and very much ahead of everybody else," Tom Libby, associate director of industry analysis at S&P Global Mobility, told Automotive News. "That's helping the brand tremendously and that's going to be very hard for another brand to create."
S&P Global's loyalty numbers are based on 12-month data through June.
In another study of brand loyalty by J.D. Power that considers only automakers with franchised dealers, which excludes Tesla, Porsche ranks highest among premium brands with a 57 percent loyalty rate, followed by Mercedes-Benz at 51 percent. J.D. Power said this week that its loyalty numbers are based on 12-month data through August.
Tesla, Rivian and Lucid are among the EV brands that sell direct to consumers.
Another opportunity
While the Cybertruck is an unusual vehicle because of its wild styling and stainless steel exterior, current Tesla owners have said on forums that they are eagerly awaiting it to upgrade from Model 3 sedans and Model Y crossovers and from higher-end Model S sedans and Model X crossovers.
An unofficial online tally of Cybertruck reservations estimates the total number at 2 million for the U.S.-built pickup. Tesla has only produced 5 million vehicles globally in its history, according to a Sept. 16 social media post by the automaker.
Musk said in May that Cybertruck sales could be anywhere between 250,000 and half a million a year, depending on demand. When the pickup was first shown in 2019, Tesla said the starting price would be around $40,000 but Musk has since said it will be higher, without giving a number.
In a survey of Model 3 owners published by Bloomberg in July, about half of those planning to buy a new vehicle in the next two years said they were considering a Cybertruck. Bloomberg said more than 7,000 verified Model 3 owners completed the survey. The Model 3 launched in 2017 and the Model Y in 2020.
According to S&P Global's loyalty data through June, 40 percent of Model 3 owners buying a new car chose a Model Y and 26 percent chose another Model 3. The compact sedan received a freshen in Europe and China last month prior to its arrival in the U.S., probably in early 2024.
"Tesla is very successful at migrating customers from a Model 3 to a Model Y, which contributes to high loyalty rates," Chiu said. "Tesla has taken advantage of the industry's shift toward CUVs. By putting the Model 3 to market first, followed by the Model Y shortly after, it gave customers a path to migrate through the portfolio."
Hitting a wall?
But the compact Model Y may be the end of that path for many U.S. households, Chiu said, because the price jump to Tesla's midsize Model S or Model X is so significant. The base Model Y starts at $52,130 with shipping, while the Model X starts at $81,630 with shipping.
About 30 percent of Model Y owners leave Tesla for a gasoline or hybrid model, S&P Global said. That shows there's room for an intermediate step in the brand lineup.
Rival luxury brands often have multiple models at different price points, which helps keep customers loyal as they look for something new.
"BMW, Lexus and Mercedes have a ladder of utilities going all the way from the subcompact up to full size," said S&P Global's Libby. "So the migration pattern with Tesla is unique because they really only have two products that are medium-priced or lower."
Kelley Blue Book said in July it expects the Cybertruck to start around $50,000, which would be similar to the Ford F-150 Lightning electric pickup that has been on sale since last year. Rivian's R1T pickup, which is slightly smaller than the full-size Cybertruck, starts at $74,800 with shipping.
According to S&P Global's loyalty data, when Tesla owners do move to a different brand for an EV, Rivian gets 3.6 percent of them, Mercedes gets 1.4 percent and BMW gets 1 percent. From there, no other conquest brand gets more than 1 percent. Lucid is at 0.9 percent, Ford at 0.7 percent and Chevrolet at 0.4 percent. Hyundai, Porsche and Audi are at 0.3 percent.
To be sure, Tesla has been slashing prices as it seeks a 50 percent increase in global sales this year, while its legacy counterparts are still relatively new to the EV market. But competition is growing, and despite its sales growth, Tesla has lost market share in the U.S., where EV sales are expected to reach at least 1 million this year, according to industry analysts.
"Tesla's product portfolio has its limits, so when owners leave, it tends to be for a vehicle-type that Elon Musk doesn't (yet) offer," Chiu wrote in his blog post. "An increasing number of luxurious EVs from established brands are hitting the market, wooing some early EV adopters away."
