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Tesla Remains Dominant, But Its Market Share In The US Is Shrinking As Cheaper EVs Enter The Market

Tesla Remains Dominant, But Its Market Share In The US Is Shrinking As Cheaper EVs Enter The Market
According to a report released Tuesday by S&P Global Mobility, Tesla remains the top-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 the data firm, Tesla's market share of new registered electric vehicles in the United States was 65% in the third quarter, down from 71% last year and 79% in 2020.
According to S&P, Tesla's EV market share will fall to less than 20% by 2025, with the number of EV models increasing from 48 today to 159 by then.
Tesla's market share in the United States was expected to decline, but the rate of decline may be concerning for investors in Elon Musk's auto and energy companies.
Tesla shares fell by about a point to $180 on Tuesday as Musk focused on repairing his recently acquired social media company, Twitter. Tesla's stock has dropped by nearly half this year.
According to S&P, Tesla is gradually losing its stranglehold on the US EV market to fully electric models that are now available for less than $50,000, a price range in which "Tesla does not yet truly compete." Tesla's entry-level Model 3 starts around $48,200 with shipping fees, but the vehicles typically retail for more when options are added.
“Tesla’s position is changing as new, more affordable options arrive, offering equal or better technology and production build,” S&P said in the report. “Given that consumer choice and consumer interest in EVs are growing, Tesla’s ability to retain a dominant market share will be challenged going forward.”
The new data comes on the heels of a Reuters report on Monday that Tesla is working on a revamped version of its entry-level Model 3 aimed at lowering production costs and reducing interior components and complexity.
During Tesla's third-quarter earnings call in October, Musk revealed that the company was finally working on a new, more affordable model that he first teased in 2020.
“We don’t want to talk exact dates, but this is the primary focus of our new vehicle development team, obviously,” he said, adding that Tesla had completed “the engineering for Cybertruck and for Semi.”
He described the future vehicle as "smaller," with production "exceeding all of our other vehicles combined."
Despite its declining market share, Tesla's unit sales are expected to increase in the coming years, according to Stephanie Brinley, associate director of AutoIntelligence for S&P Global Mobility.
Tesla's current EV market leadership is over a relatively insignificant market. Despite the hype surrounding EVs, sales of all-electric and plug-in hybrid electric vehicles — which include both electric motors and an internal combustion engine — remain insignificant.
Approximately 525,000, or 5.1%, of the 10.22 million vehicles registered in the United States through the third quarter were all-electric models. According to S&P, this is up from 334,000, or 2.8%, through the third quarter of 2021.
According to S&P, Teslas accounted for nearly 340,000 of the EVs registered through September. The remaining vehicles were distributed in an uneven manner among 46 other nameplates.
However, Tesla's market success, combined with government incentives, has all but forced traditional automakers to make an effort in the growing EV segment.
According to S&P, the only non-Tesla vehicle in the top five rankings is the Ford Mustang Mach-E, which is ranked third in EV registrations. Following those EVs were the Chevrolet Bolt and Bolt EUV, the Hyundai Ioniq 5, the Kia EV6, the Volkswagen ID.4, and the Nissan Leaf.
According to S&P, current Toyota and Honda vehicle owners are driving the EV growth.
Both automakers are well-known for producing fuel-efficient vehicles, but they have been slow to transition to all-electric vehicles.
Several states and the federal government are encouraging the transition to fully electric vehicles with incentives such as tax breaks to help reduce carbon and other emissions from traditional gas-powered vehicles.
According to estimates from the non-profit International Council on Clean Transportation, transportation accounts for 25% of global carbon emissions from human activity.

Christopher J. Mitchell

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