In 2016, Publicity-Shy Infiniti Outsold Tesla 3:1
Contrary to what CNBC and other media attention might suggest, Tesla is not the largest seller of premium cars. Infiniti outsold Tesla 3:1 in 2016.
Just like Tesla, most of Infiniti's sales are in the U.S. 60% in 2016 to be exact, down from 62% in 2015.
Infiniti grew 140% in West Europe in 2016, thanks in part to a new model being assembled in the U.K. (Infiniti’s production in Europe).
Tesla grew 50% and Infiniti 7%. If you assume these growth rates going forward, Tesla would pass Infiniti in 2020.
Infiniti is developing its first electric car to launch in 2020. Consider the fact that Infiniti is owned by Nissan, maker of the LEAF.
The automotive industry is filled with interesting comparisons and contrasts. Some companies receive outsized attention for very small numbers. Other companies toil away in the quiet, without fanfare - all while delivering on impressive numbers.
One such comparison is between Tesla (NASDAQ:TSLA) and Infiniti. Infiniti? Yes, Infiniti. That's Nissan's (OTCPK:NSANY) luxury car division. It's been selling cars in the U.S. for just over the quarter-century mark: here.
However, you don't hear much about Infiniti in the financial press. CNBC does not report on its new models or on its CEO's tweets. It's as if it was selling far fewer cars than Tesla.
Based on its preliminary reporting for the December quarter, Tesla sold 76,233 cars in 2016, up 50% from 2015.
Tesla Global 2016 2015 Change y/y 1Q 14810 10045 47% 2Q 14402 11532 25% 3Q 24821 11603 114% 4Q 22200 17478 27% TOTAL 76233 50658 50%
As you can see in the table above, while the quarterly growth rate was very uneven, ranging from 25% to 114%, at a 50% annual average, it was still very strong. One of the strongest in the automotive industry (Jaguar (NYSE:TTM) was up 77% in 2016 and was double the absolute size of Tesla).
At 76,233 units in 2016, Tesla constituted less than one-thousandth of the world-wide automotive industry, which now handily exceeds 76 million units per year. So now onto a good example of what garners less attention than not only Tesla, but also industry growth leader Jaguar.
And that would be Infiniti. It sold 230,000 cars in 2016.
Infiniti Global 2016 2015 Change y/y 2016 share 2015 share USA 138293 133498 4% 60% 62% Canada 12140 11300 7% 5% 5% Mexico 2220 1805 23% 1% 1% West Europe 16800 7000 140% 7% 3% China 41590 40200 3% 18% 19% Asia/Oceania 6700 5678 18% 3% 3% Rest of World 12430 15769 -21% 5% 7% TOTAL 230173 215250 7% 100% 100%
As you can see in the table above, Infiniti's geographic distribution shifted a little bit in 2016 when compared to 2015. By far, the best performer was West Europe.
This superior performance in West Europe was likely because of the introduction of the all-new UK-built QX30 crossover/hatchback, which some (very) generously label an "SUV." This model was heavily focused on Europe and caused West Europe overall to be up 140% for Infiniti in 2016.
Infiniti's decline came from the "rest of world" which appears to be a combination of Russia/Eastern Europe and the Middle East. No surprise there.
But overall, Infiniti selling 230,000 units made it three times as large as Tesla in 2016. Did CNBC report this? Did anyone else? I didn't think so either.
The U.S. was up 4% for Infiniti, which still meant the slightest decline in its sales percentage for the U.S. - globally it was up 7% - so how did its U.S. sales break down in 2016?
Infiniti USA 2016 2015 Change y/y 2016 share 2015 share Q40 59 8605 -99% 0% 6% Q50 44007 43874 0% 32% 33% Q60 3970 3949 1% 3% 3% Q70 5872 8449 -31% 4% 6% QX30 2259 N/A 2% 0% QX50 16973 5468 210% 12% 4% QX60 42120 41770 1% 30% 31% QX70 6261 5737 9% 5% 4% QX80 16772 15646 7% 12% 12% TOTAL 138293 133498 4%
As you can see in the table above, Infiniti sells four sedans/coupes (Q) and five crossovers/SUVs (QX) in the U.S. market. What were the notable changes in 2016?
On the downside, the Q40 model went away, and the Q70 - its largest sedan - saw a 31% decline. This was more than compensated mostly by the QX50 crossover-SUV model. Its U.S. sales more than tripled in 2016.
The dramatic success of the Infiniti QX50 in 2016 is all the more remarkable because the QX50 stands out as the oldest-looking vehicle in the Infiniti portfolio. It just looks out of date compared to all the others in the Infiniti showroom.
At the January 2017 Detroit Auto Show, Infiniti showed the replacement for the QX50 in concept car form: here.
Basically, expect the actual all-new QX50 to arrive within approximately the next year or so. If it looks anything like the concept car - it likely will - one supposes that it could grow its sales even further.
How long time until Tesla catches up with Infiniti?
Perhaps Tesla's growth rate will soon decline rapidly - or even shrink below zero - and it will never catch up with Infiniti. But let's take Tesla's current annual growth rate of 50%, as well as Infiniti's 7%, and see how soon these two companies would "get close" at the rate of current trends.
If Tesla grew 50% on top of 76,233, it would be at 114,350.
If Infiniti grew 7% on top of 230,173, it would be at 246,285.
If Tesla grew 50% on top of 114,350, it would be at 171,524.
If Infiniti grew 7% on top of 246,285, it would be at 263,525.
If Tesla grew 50% on top of 171,524, it would be at 257,286.
If Infiniti grew 7% on top of 263,525, it would be at 281,972.
If Tesla grew 50% on top of 257,286, it would be at 385,930.
If Infiniti grew 7% on top of 281,972, it would be at 301,710.
So basically, Tesla growing at 50% and Infiniti at 7% results in Tesla pacing ahead of Infiniti some time in calendar-year 2020. These are big assumptions - for both companies - and these growth rates are unlikely to continue for another four years exactly the way they did in 2016 and 2015. Either company - Tesla and Infiniti - can outperform or underperform these projected growth rates.
Of course, these growth rates say nothing about profitability or balance sheet, let alone risk-adjusted returns. Infiniti is part of Nissan and does not carry any net debt, and Nissan as a whole is eminently profitable. Tesla has never put in a profitable year and carries billions of dollars in debt.
Speaking of 2020, that's when we expect Infiniti to make available its first all-electric car. Infiniti's corporate parent Nissan has multiple electric cars in the market - including the LEAF - and development of the first all-electric Infiniti has finally started. I expect to see it in concept car form as early as 2018.