You’re here is still the best-selling electric vehicle brand in the United States, but its dominance is eroding as competitors offer a growing number of more affordable models, according to a report released Tuesday by S&P Global Mobility.
The data company found that Tesla’s market share of new U.S.-registered electric vehicles was 65% in the third quarter, down from 71% last year and 79% in 2020. S&P expects the share of Tesla’s electric vehicle market will decline to less than 20%. by 2025, the number of electric vehicle models expected to increase from 48 today to 159 by then.
A decline in Tesla’s U.S. market share was expected, but the pace of the decline could be a concern for investors in Elon Musk’s auto and energy company. As Musk focuses his attention on fixing his recently acquired social media company, Twitter, shares of Tesla closed about a point at $180 on Tuesday. Tesla’s stock has been down nearly six months to date.
S&P reported that Tesla was slowly losing its stranglehold on the U.S. electric vehicle market in favor of all-electric models now available in price ranges below $50,000, where “Tesla isn’t really competing yet.” Tesla’s entry-level Model 3 starts at around $48,200 with shipping, but vehicles generally sell for higher prices with options.
“Tesla’s position is evolving as new, more affordable options arrive that offer equal or better production technology and construction,” S&P said in the report. “As consumer choice and interest in electric vehicles increases, Tesla’s ability to maintain a dominant market share will be tested in the future.”
The new data follows a Reuters report on Monday that Tesla is developing a revamped version of its entry-level Model 3 aimed at cutting production costs and reducing interior components and complexity.
During the company’s third-quarter earnings call in October, Musk said Tesla was finally working on a new, more affordable model it first launched in 2020.
“We don’t want to talk about exact dates, but that’s obviously the primary focus of our new vehicle development team,” he said, adding that Tesla has completed “engineering for Cybertruck and for Semi “.
He described the future vehicle as something “smaller”, which “will exceed the production of all our other vehicles combined”.
Stephanie Brinley, associate director of AutoIntelligence for S&P Global Mobility, noted that Tesla’s unit sales are expected to increase in coming years despite its declining market share.
Tesla’s current leadership in electric vehicles is for a relatively insignificant market. Despite the focus on electric vehicles, sales of all-electric and plug-in hybrid electric vehicles – which include electric motors as well as an internal combustion engine – remain minimal.
Of the 10.22 million vehicles registered in the United States during the third quarter, about 525,000, or 5.1%, were all-electric models. That’s up from 334,000, or 2.8%, through the third quarter of 2021, according to S&P.
The majority of electric vehicles registered through September — nearly 340,000 — were Teslas, according to S&P. The remaining vehicles were distributed, very unevenly, among 46 other nameplates.
But Tesla’s success in the market plus government incentives have all but forced traditional automakers to push into the growing electric vehicle segment.
The Ford Mustang Mach-E, ranked third for electric vehicle registrations, is the only non-Tesla vehicle in the top five rankings, S&P said. These electric vehicles were followed by the Chevrolet Bolt and Bolt EUV, Hyundai Ioniq 5, Kia EV6, Volkswagen ID.4 and Nissan Leaf.
S&P noted that the growth in electric vehicles is largely coming from current owners of Toyota and Honda vehicles. Both automakers are well known for their fuel-efficient vehicles, but have been slow to transition to all-electric models.
To help reduce carbon and other emissions from traditional gasoline vehicles, several states and the federal government are encouraging the transition to all-electric vehicles with incentives such as tax breaks.
Transportation is responsible for 25% of carbon emissions from human activity worldwide, according to estimates by the nonprofit International Council on Clean Transportation.
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