Rich people love Tesla
(MoneyWatch) Despite a lacklusterthird quarter earnings report, Tesla says its production cannot keep up with demand for its stylish Model S. And demand for the $62,400 electric sedan is especially strong in America's most affluent neighborhoods.
The Model S outsells every other model in eight of the 25 most affluent U.S. zip codes, according to research by automotive web site Edmunds.com. Working with Forbes data of the 25 richest neighborhoods and auto registration details from Polk, Edmunds tracked the best-selling cars in each zip code. In eight areas, the Model S outpaced all luxury Mercedes-Benz, BMW and Lexus cars as well as more mundane competitors. In the richest zip code of Atherton, Calif., where the median home sells for $6,635,261, the Model S posted an astounding 15 percent share of new cars sold.
To be sure, Atherton is the Silicon Valley neighbor of Palo Alto, where Tesla is headquartered. And all eight of the Tesla-loving zip codes are in California, where an all-electric car lets you drive in the time-saving high-occupancy vehicle lanes even if you are all alone. Indeed, the only zip code outside of California where the Model S topped one percent of new cars registered was Water Mill, N.Y., one of the Hamptons beach communities where Wall Streeters and other affluent New Yorkers have weekend homes.
As rarefied as current Model S buyers appear, Edmunds analyst Jessica Caldwell believes that future, less-expensive Tesla models could find a following among buyers with more modest incomes. "It's a classic pattern for any retail product, including cars: The wealthy and influential buyers set a trend, and the mainstream aspires to follow," she notes. "So as Tesla increases the number of models on offer and price points, it could find itself in demand by more than just those in wealthy enclaves."
Tesla plans to boost its production capacity over coming quarters, Tesla CEO and founder Elon Musk told analysts in a conference call following the earnings report. Tesla's shares (TSLA) were down $20.66, or 11.7 percent, at $156.15 during the first hour of trading on Wednesday.
