At Tuesday night’s annual shareholder meeting, Tesla CEO Elon Musk reassured everyone that there was no demand problem for the company’s cars, and that the Tesla Model 3 was actually the best-selling car, by revenue, against heavyweight competitors like the Toyota Camry, Honda Accord, and whatever the hell a “Honda Corolla” is. But what does that actually mean?




After bringing up how the Tesla Model 3 continues to outsell premium compact sedan competitors like the BMW 3 Series, Audi A4 and Mercedes-Benz C-Class, Elon Musk moved on to say that the Model 3 was the best-selling car by revenue against every high volume sedan sold in the U.S.

You can watch this moment at around the 28:30 mark in the video uploaded to Tesla’s YouTube channel. Here’s a screenshot of the comparison chart between the Model 3 and other sedans from the livestream:


Typos aside, it’s worth asking why Tesla chose to compare the Model 3 against other high volume sedans only by revenue. As far as industry measurements go, best-selling by revenue is kind of bullshit, since it’s only an indicator of money that’s coming in, and doesn’t account for how much money it takes to build, market, and deliver the car, among other expenses.



Further, as Musk said on stage, cars like the Camry, Accord, Civic and Corolla actually outsell the Model 3 by volume, they just cost less, since they aren’t in the Model 3's premium sedan segment. More interestingly, Musk said that Model 3 both outsold and brought in more revenue than all of its true competitors—the 3 Series, C Class, Audi A4—combined.

That is impressive, and definitely the kind of thing you would say at a shareholders’ meeting, to an audience primed for some good news. But Tesla is still way behind on the metric that pretty much everyone else in the industry uses to assess a business’ health: profit.

Toyota, for example, had operating income of $22 billion in the fiscal year ending in March. Honda had a little less than $7 billion operating income during the same period. BMW made about $10 billion in calendar year 2018, while Daimler took in $12.5 billion and Volkswagen made $15.8 billion in that time.


Tesla, meanwhile, said in January that it lost $1 billion in 2018, and followed up that news with another huge loss in the first three months of 2019, amid questions of whether weakening demand was starting to become an issue for the company.

Nicole Carriere, a spokeswoman for Edmunds.com, told Jalopnik that Tesla calculates the best-selling-car-by-revenue stat using some of Edmunds’ data, but she said that it’s not used internally.


“... this is not something that our analysts leverage or even calculate as a way to assess the health of an automaker’s business (profitability is a key factor that’s not accounted for in this figure),” Carriere said after we reached out for an expert opinion.

Tesla declined to comment on the record, but pointed Jalopnik to comments CFO Zachary Kirkhorn made in its first-quarter earnings conference call, when the company said it lost $702 million in the first three months of 2019.

Yes, this is Zach. I mean, what we saw on February 28 when we launched the Standard Range, the Standard Range Plus variance is that there’s pent-up demand for those products that released very quickly after it was announced. And then as more time has passed and order rates have stabilized, it’s starting — the average ASP has actually been increasing each week ever since as the order rate stabilizes. And just under $50,000 ASP represents the most recent data, and we think it’s starting to stabilize there. And we’ll see where things trend in EMEA and China as well, but what we’re seeing in North America is that over 50% of our orders are of the long-range variants and the ASPs are profitable enough.


ASP in this context stands for average selling price, and so a Model 3 with a stable average selling price of just under $50,000 sounds about right, considering the performance trim starts at $59,900 before options.

But all of these numbers won’t mean anything if Tesla can never reliably turn a profit, and it’s up to them to prove to everyone there isn’t actually a demand problem. We’ll get more hints about that when Tesla reports its second quarter figures later this summer.