OK, this is not exactly a surprise.
According to calculations by Reuters, based on official statistics from January to September, Tesla’s monopolistic market share in California has decreased this year as competitors step up their game.
Using vehicle registration data from the California Energy Commission, Tesla controlled 73% of the battery electric market in California from January to September, its lowest share since 2018. In 2021 and 2020, Tesla had a 75% and 79% share, respectively.
Tesla’s reduced market share is sure to concern investors, as it’s the biggest state for battery electric vehicles (BEV) sales in the United States, accounting for 15% of its sales. Statewide, EVs, as well as hydrogen fuel cell (HFCV), and plug-in hybrid-electric vehicles (PHEV), account for 18% of new car sales, nearly one-fifth of the market. But at 53% more people consider buying a Tesla than any other EV brand, ranking top in brand consideration according to automotive consultants AutoPacific, but it’s down from 58% last year.
What’s causing sales to slide
Tesla CEO Elon Musk drawn criticism for his acceptance of Republicans and pursuit of Twitter, especially in liberal-leaning California. This is drawing some consumers away from Tesla.
Then there’s the onslaught of competitors arriving in 2023, starting with General Motors, which plans to planning to bring 30 or more BEVs by 2025, including the $30,000 Chevrolet Equinox EV, the Silverado EV and the $300,000 Cadillac Celestiq. And others are ramping up production as well, such as Nissan with its Ariya EV, Hyundai with its Ioniq 5 and upcoming Ioniq 6, Kia’s EV6 and forthcoming EV9. And that’s just scratching the surface.
The assault arrives as Tesla models continue to be sold with few if any cosmetic updates. The model S looks much as it did more than decade ago. Other models are similarly bereft of updates. So far, it hasn’t crippled sales, but it appears that a decade of selling the same models is starting to catch up to Tesla. When every driveway sports the same car, it’s going to start to send buyers looking for alternatives, and automakers are finally offering a variety of models from which to choose, be it a practical, affordable Chevrolet Bolt to the Ford F-150 Lightning.
One thing is for sure: it’s hard to imagine Tesla’s market share growing given what’s coming from the world’s competitors.
This may be why a new entry-level battery-electric car is once again being developed that would follow the company’s Model 3 sedan in the existing lineup. Most likely to be known as the Model 2 sedan, the all-electric vehicle, could be joined by an entry-level SUV model employing the Model Q moniker, as reported by TheDettoitBureau.com.
Certainly the new model would Tesla vehicles more affordable, as the Model 3 starts at $48,490.
It’s not the EV market share that matters. It’s the total vehicle market that matters. Tesla is not competing against other EVs. They’re competing legacy auto. Their sales are not tanking. They are growing 50% year over year.
If you look at some of the forecasts, Nick, Tesla faces not just a decline in share but a severe slowdown in growth in the U.S. market. BoA’s John Murphy, who has a stellar track record, forecast in the most recent “Car Wars” study that Tesla will drop to around 11% of the U.S. EV market, GM and Ford each surging to 15%. Even with the most optimistic growth forecast for U.S. EV sales that means Tesla could see only modest growth here.
But Murphy stressed that Tesla will continue to grow globally and that could be the most critical thing for them.
Paul E.