Despite a bad quarter, Tesla is singlehandedly growing the sluggish electric-car market

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Tesla's growth, especially in the US, has been spectacular given that there's been almost no change to automaker market share for a decade.

Tesla reported a substantial drop in vehicle sales for the first-quarter, compared with the fourth quarter of 2018. The slide in the number of delivered vehicles was 31% compared to the quarter before, and that drop quickly raised alarms about whether the carmaker has enough sustainable demand going forward to achieve consistent profits.

Lost in the gloomy expectation that Tesla will either lose money or be faintly profitable in the first quarter was the massive increase in deliveries versus the first quarter of 2018: 110% higher.The number of all electric vehicles that Tesla is putting into the market alone is enormous by historical standards. The electric-car market, much touted since 2010, has largely been a bust.

In fact, there's so much of a Tesla market that the carmaker is starting to threaten well-established luxury brands. In the first quarter, according to Edmunds.com, Tesla outsold Audi and put some pressure on Mercedes and BMW. When Tesla was manufacturing relatively few vehicles, it was easy to argue that there wasn't much"cross-shopping" going on.

Following Tesla's latest delivery report, however, the markets do need to grapple with how Tesla sustains its rising levels of sales. Because if those sales decline precipitously, or Tesla falters under the intense capital demands of the auto industry, then the electric-vehicle market could go"Poof!" Carmakers could stick to their EV plans, but that would be mainly to comply with future government regulations about emissions.

 

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