Tesla overtakes Mercedes in key premium midsize SUV segment

The Tesla Model Y was Europe's best-selling premium midsize SUV in the first half, beating German rivals including the segment's former leader, the Mercedes-Benz GLC.

The sales growth of the Model Y, which is supplied both by Tesla's new plant near Berlin and its facility in Shanghai, China, has been so strong that it could potentially surpass the Audi A3 to become Europe's best-selling premium model outright, preliminary half-year figures from Dataforce show.

"The Tesla Model Y has been very successful in the European market and it's set to grow further," Dataforce
senior automotive analyst Benjamin Kibies said.

Tesla's electric SUV has been rising up the sales rankings since its gradual rollout across Europe started last year. The Model Y was Norway's top-seller in the first six months while in June it topped Sweden's sales charts and finished No. 2 overall in the UK.

The Model Y recorded 41,851 sales in the first six months, beating the GLC (40,554), according to Dataforce's preliminary pan-Europe numbers, which exclude figures from Finland and Portugal.

The BMW X3 was third with 31,138 and the Volvo XC60 fourth with 27,836 sales (see table, below).

Tesla's entry helped push total sales in the premium midsize SUV segment above 250,000 for the half, a rise of 18 percent on the same period last year.

The success of the Model Y had another important impact on the segment: Diesel is no longer the dominant fuel. In the first half diesel tied with electric, with each having a 32 percent share of the segment (see table, below).

Almost half of all EV sales in the segment came from the Model Y while Audi's combined EV volume of 30,612 units, led by the Q4 e-tron, accounted for a third.

The Volkswagen Group brand has split its strategy by offering coupe-styled Sportback versions of both the Q4 and the slightly larger e-tron to give it wider coverage.

The China-built BMW iX3 was the No. 4-selling electric model in the segment after the non-coupe versions of the Q4 e-tron and e-tron. Finishing fifth was the Mercedes EQC. The Jaguar I-Pace was the slowest-selling EV in the category with a volume of 3,528.

Plug-in hybrids were another key drivetrain in the segment, taking a 19 percent share during the first half.

Sales were led by the GLC at 14,379, with Volvo XC60 plug-in hybrid second with 9,747 units, followed by the BMW X3 at 9,568.

The other plug-in hybrid variants competing in the segment are the DS 7 Crossback, Lexus NX, Audi Q5, Range Rover Velar, Land Rover Discovery Sport and Jaguar F-Pace.

Gasoline models accounted for 15 percent of sales in the segment, led by the Porsche Macan, which could indicate that the brand's lack of a plug-in hybrid variant is hampering its volume.

Hybrids were led by the Lexus NX, the only model in the segment with the powertrain, with 3,206 sales in the first half compared with 2,802 sales of the SUV's plug-in hybrid version.

To become Europe's best-selling premium car in 2022, the Model Y has to beat the Audi A3, which led the compact premium segment with first-half sales of 51,994, as well as the BMW X1, Mercedes A-Class, BMW 3 Series and Mini hatchback.

With the exception of the Mini, the other four vehicles posted sales declines in the first half.

Tesla's ability to increase sales of the Model Y in the second half will depend as much on its industrial capacity as customer demand.

The company is slowly boosting capacity at its new Gruenheide factory for the Model Y, and CEO Elon Musk promised in July's earning call to raise the German plant's weekly output from 1,000 in June to 5,000 vehicles “by the end of this year or early next year.”

Musk promised that number would increase to 10,000 a week by the end of next year. Tesla has said it wants to produce 500,000 cars a year in Gruenheide.

Currently, the German factory builds higher-power Performance versions of the Model Y, with the standard dual-motor models coming from Tesla's Shanghai plant, information seen by analyst Matthias Schmidt shows.

Currently the split is 20 percent Gruenheide and 80 percent Shanghai, Schmidt said.

The Gruenheide facility is being updated with the objective of improving the time spent at each assembly station to 45 seconds from 90 seconds, according to a report from Automotive News Europe sister publication Automobilwoche.

Tesla has cut the choice of colors for German-built Model Ys to just black and while as paint shop in response to teething problems with the paint shop, according to the report.

The Model Y's success has come at the expense of the Model 3, which had a 39 percent sales decline in the first half to 38,455 units, dropping it behind the BMW 3 Series in the midsize premium segment, Dataforce figures show.

European deliveries of both the Model 3 and Model Y were hit by the temporary COVID-related lockdown of the company's Shanghai facility early in the second quarter. Tesla's Musk, however, said the plant achieved record output in June.

Tesla's single model available with just two specifications is so far beating the segment strategy of its premium rivals to offer different body styles and up to four different drivetrains. An outright win for Tesla in the segment for the year would no doubt cause rivals to question whether they need such complex and varied portfolios.