Gabe Nelson
Gabe Nelson
Silicon Valley, Tesla, Hyundai, Kia, Mazda and Mitsubishi

Audi gripes, but Tesla could be en route to niche-brand success

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Audi wants to be clear: Just because the Tesla Model S is outselling Audi's flagship A8 in the U.S. luxury sedan market, it does not mean Tesla Motors is beating Audi.

In a blog post today on Audi of America's official news channel, the company says it has a problem with recent news reports praising Tesla. Why? Headlines such as this one, from CNNMoney.com: "Tesla sales beating Mercedes, BMW and Audi."

"Some reports are giving Tesla too much credit," Audi says. "The fact is that Tesla's reported sales of 4,750 units of its Model S electric car in April were less than half of Audi of America sales of 13,157 vehicles in the month, which represented a 16-percent rise from a year earlier. BMW and Mercedes-Benz sold even more than that."

Actually, Tesla says it sold 4,750 cars in the first quarter of 2013 -- not in April alone. All the more reason for the German luxury brand's hurt feelings, I suppose.

(A spokeswoman for Tesla, which has benefited from soaring stock prices since it posted its first quarterly profit in April, declined to comment on Audi's gripe.)

At face value, Audi has a point. People would scoff if headline writers were to declare that Fiat is beating General Motors just because Fiat's only nameplate, the 500 subcompact, is outselling the Chevrolet Spark subcompact. (Which it is.)

On the other hand, Audi and other luxury brands cannot afford to write off Tesla as a one-segment wonder.

Tesla could easily follow in the footsteps of Mini, which launched in the United States with a single model 11 years ago, and has built itself into a viable niche brand by selling variations on that same Mini Cooper.

Today, despite its small product line, BMW-owned Mini is as big as Volvo, selling nearly 20,000 vehicles through April. Despite its premium price tag, Mini is nearly as large as Toyota's mass-market Scion brand. Despite its newness, Mini sells almost as many cars as Jaguar and Land Rover combined.

Mini has reached the point where brands -- including Audi -- are envious of its place in the bite-sized segment, and are introducing smaller luxury cars to compete.

Even if all goes according to plan by the time it gets to be Mini's age, Tesla probably will not have Audi's product line, which ranges from compact cars to three-row crossovers. It probably will not have Audi-sized sales numbers, or Audi-sized profits.

But with its all-electric luxury cars, Tesla may look a lot like Mini, dominating a niche of the car market in its own distinctive way.

That would be nothing for a brand like Audi to scoff at. Just ask Mini.

You can reach Gabe Nelson at gnelson@crain.com.

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