Tesla has emerged as the dominant luxury brand in the U.S. But readers often ask: Is it really luxury?
First of all: Yes, just look at the prices.
But second of all: Yes, it’s just a different type of luxury.
Teslas don’t have the kind of plush interior or sturdy door-slam sound we’re accustomed to associating with the nicest, most-expensive cars on the market. But what some see as bare bones, others seek as sleek, minimalist and modern.
But the luxury that Tesla buyers are looking for isn’t a big, soft seat and ornate decorations: It’s technology.
Teslas are fast, quiet and clean. And while there are more electric vehicles coming to the market seemingly every month, Tesla seized the high-end EV market early on when incumbent automakers were toying with compliance cars and never let go. The instant torque and mind-blowing 0-to-60 mph times might make them somewhat dangerous, but hardly mainstream.
And while a V-8 or even bigger engine used to be an element of luxury, for many drivers these days, zero-emission driving is also an element of luxury.
Tesla’s technology play goes far beyond the powertrain and the big touchscreen that set off the most obvious trend in modern vehicle interiors.
Over-the-air updates aren’t just a way to avoid costly recalls — Tesla uses them to make their cars better over time. That’s not to say they won’t depreciate, but it changes the curve significantly.
Advanced driver-assistance systems are another form of luxury that Tesla leads. Its Full-Self Driving may not drive itself and Autopilot may not do what most non-pilots think autopilot does, but they are among the very top-performing systems available for public purchase.
What’s the biggest concern with EVs? Range. What does Tesla have? A nationwide network of Superchargers that can provide up to 200 miles of range in 15 minutes. In an economy where time is money, that’s value.
There could be a new, curious argument for not counting the smaller Teslas as luxury vehicles: Their volumes are swelling to mass-market sizes. In the third quarter, the Model Y ranked among the top 10 light vehicles by U.S. sales, according to Automotive News Research and Data Center estimates, placing just ahead of the Ford Explorer. And the Model 3 was the No. 3 selling car, trailing only Toyota’s Camry and Corolla.
And it’s those two smaller Teslas that have really accelerated the brand’s growth, thanks to the additional output from the company’s new assembly plant in Texas. Through three quarters, the Data Center estimates that Tesla has sold more of its EVs than any luxury peer has sold in a calendar year since 2015. By now, it’s surely topped the modern record of 350,813 set by Cadillac in 1978.
A reader sent me a letter once criticizing our labeling of the Model 3 as a luxury car, saying it resembled a Honda Civic. But here’s the thing: It costs twice as much. It’s priced more like a BMW 3 Series, which is still widely considered a luxury model.
From the vantage point of Tesla’s CEO and top shareholder Elon Musk, the world’s richest human, those might all look like plain-vanilla prices. But for most consumers, they are a big step up from a mainstream sedan.
The Model Y’s price starts midway between the Lexus RX 450h and a Cadillac Escalade. The S and X start north of $100,000 and the upcoming Roadster is expected to begin production with a run of 1,000 Founders Series models priced at $250,000.
Of course, price alone does not a luxury vehicle make: A dump truck is not typically a luxury item. Most pickups are built for work, but more and more offer luxury features and extra-high prices. And we won’t be counting the Tesla Semi as a luxury vehicle, at least not to start.
If Tesla ever offers a car under $30,000, which Musk this year de-prioritized, we will definitely consider reevaluating the brand or dividing the luxury and non-luxury sales. But for now, this brand, which started with three models selling for more than $80,000 and with few vehicles transacting for less than $60,000, sits firmly in the luxury space.