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Is the Tesla Model S Killing the Prius?

Tesla (TSLA) and its Model S electric sedan are a hot topic of conversation, but TSLA has actually placed a relatively small number of vehicles in U.S. garages; Tesla sales forecasts for 2013 are around 20,000 Tesla electric cars by year-end.

Meanwhile, Toyota (TM) and its iconic Prius hybrid are fixtures of the roadway. In calendar 2012, for instance, Toyota sold about 225,000 hybrids across its new line of Prius V, Prius C and Prius Liftback models.

While it may be a bit silly for investors or consumers to worry Tesla is going to bankrupt conventional automakers like Toyota, it’s worth wondering if over the long-term it’s possible that plug-in electric vehicles will render hybrids obsolete.

After all, the biggest advantage for the Prius and other hybrids like the Insight from Honda (HMC) or the Fusion hybrid from Ford (F) is pricing. Typically a hybrid compact car starts are around $20,000 and can run up to about $30,000 for a mid-sized sedan.

And though less critically acclaimed than the Tesla, it’s worth noting a plug-in Prius is selling at a decent rate too – about 12,750 in 2012. The Nissan Leaf tallied about 10,000 units last year, and the Chevrolet Spark compact EV from General Motors (GM) sold almost 27,000 vehicles in its first 12 months on the market.

The Tesla Model S is admittedly positioned differently as a higher-end vehicle with more space and better features, but the base price is almost twice that at $62,400 including a $7,500 federal tax credit.

But Tesla is pushing ahead with plans for its entry level Model E sedan that could launch in 2015 with a starting price of just $35,000 — putting it on equal footing with mid-sized hybrids.

It’s unclear whether hybrids will be able to hold their own going forward as electric vehicles become increasingly more affordable. But the Tesla surge in 2013 could be evidence that we are seeing the EV revolution right now, and at the cost of gas-electric hybrids like the Toyota Prius.

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Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, he did not own a position in any of the stocks named here.

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Comments
  • eleplant in a bottle

    It’s TESLA vs ICE cars .. and yes .. Prius is one of them.

  • Timothy

    I hope Tesla stomps on every car company out there. It’s ridiculous that all these car companies with their designers and money can’t produce a car half as cool as a Tesla!