Tesla remains the best-selling electric car brand in the United States, but its dominance is eroding as competitors introduce more affordable models, automotive research firm S&P Global Mobility said in a report yesterday.
Tesla Model 3
As of the third quarter of this year, Tesla’s share of the U.S. market for newly registered electric vehicles was 65 percent, down from 71 percent last year and 79 percent in 2020, according to the data. S&P Global Automotive forecasts that by 2025, the number of electric vehicle models in the U.S. is expected to increase from the current 48 to 159, and Tesla’s electric vehicle market share will fall below 20 percent.
The decline in Tesla’s U.S. market share is to be expected, but the speed of the decline could worry investors in Elon Musk’s auto and energy company. Tesla shares closed down about 1 percent to $180 yesterday as Elon Musk focused his attention on turning around his recently acquired social media company, Twitter. So far this year, Tesla’s shares have fallen by nearly half.
The report says Tesla is slowly losing its dominance of the U.S. electric car market, replaced by all-electric vehicles that now cost less than $50,000. In this segment, “Tesla is not yet truly competitive. Tesla’s entry-level Model 3 starts at about $48,200 (including shipping), but the car is typically offered with more configuration options and sold at a higher price.
“Tesla’s position is changing as new, more affordable options arrive that offer equal or even better technology and production building blocks,” said S&P Global Automotive, “and given that consumer choice and interest in the electric vehicle market is increasing, Tesla’s future ability to maintain its dominant market position ability to maintain market dominance will be challenged.”
This follows reports on Monday that Tesla is developing an improved entry-level Model 3 designed to lower production costs and reduce internal components and complexity. Elon Musk said during a third-quarter conference call in October that Tesla would eventually develop a new, more affordable model. He first teased the model in 2020.
Stephanie Brinley, associate director of automotive research at S&P Global Automotive, noted that Tesla’s sales are expected to grow in the coming years, despite a decline in market share.
Tesla’s current leadership position in the electric vehicle segment is based on a relatively insignificant market. Despite the attention on electric vehicles, sales of pure electric and plug-in hybrid vehicles remain negligible.
Of the 10.22 million vehicles registered in the U.S. through the third quarter of this year, about 525,000 were all-electric models, or 5.1 percent, up from 334,000 and 2.8 percent in the third quarter of 2021, according to S&P Global Automotive. As of September, the majority of electric vehicles registered in the U.S. (nearly 340,000) were Tesla, with the rest very unevenly distributed among 46 other brands.
