Tesla’s Market Share in USA Comparing Global Electric vehicle Market and its potential for growth
Many individuals believe that Tesla is presently losing market share. They then derive a number of other implications from this; I thought we could analyze how this Tesla Market Share is calculated, go through some of the assumptions that people make from it, and figure out what is really going on and how it may effect Tesla.
A lot of the market share loss hyperbole has come from a graph. Let us analyze the graphs of Tesla’s market share in the United States globally. This is also Tesla’s market share for BEVs, thus no smart Chinese marketing with New Energy Vehicles, which essentially include ICE. Tesla’s true product is battery-powered automobiles. Now let’s go through them one by one.
“According to Passenger Electric Vehicle market share, Tesla had a 12% market share in Q4 2022. Despite the fact that Tesla is the best-selling brand in the pure battery EV (BEV) market. By the end of 2023, EV sales are estimated to reach approximately 17 million units.”
Tesla Market Share in United States of America :
Beginning with the United States, we can witness a dip from about 80% in Q4 to a low 60% market share in Q2. That’s a significant decline. The largest reduction was from Q1 to Q2, however if we look at actual sales in the US, Tesla moved from 126,000 in Q1 to 136,000 in Q2, increasing their sales by 8% quarter over quarter in the US. So why are they losing market share? Others are entering the market, reducing Tesla’s market share. We all know that electric is the future, and legacy has realized this as well, therefore they are also attempting to establish a position in this market.
Tesla cannot and will not do anything to suppress competition; in fact, the reverse is true. It is beyond their control. Tesla can only produce as many vehicles as they can. But, Fremont is nearing capacity, and there isn’t much more room for scaling there. However the other several dozen automakers are also attempting to enter this large market. Even willing to sell their autos at a loss in order to get market share and brand awareness before the market saturates.
Tesla’s production and sales are still expanding in the United States; it’s just that some of their competitors are also entering the market, and Tesla has been essentially stagnant over the previous year. Unless, of course, the all-powerful Texas comes online, which should more than treble Tesla’s US output early next year. And there’s another plant going up there. It’s difficult to keep around 80% because it’s such a large market share. If the others don’t go bankrupt, it’s a race for market share.
Tesla will have around 5 million vehicles per year after Texas and this new facility are ramped up; just from those facilities, we should expect approximately 5 million vehicles per year, maybe by 2026. Nonetheless, I believe Tesla should get a move on here and possibly have another manufacturing functioning in the US by then as well. I don’t see why they couldn’t after this 4680 approach is developed.
If the US market share is 15 million automobiles per year, Tesla would have already secured a third of it with this level of manufacturing. Of course, it’s difficult to say how many of these cars are Robo taxis, and whether Tesla will focus more on that aspect of the company since it’s more profitable than their already highly profitable EV business. Yet, if Tesla continues to make vehicles for customers, I believe they will have close to a 50% market share of BEVs in 2026, and potentially 40% market share when the US market is saturated.
Although there is also the chance Tesla double down in the US due to this tax credit. So it would really would be nice to know more about the future path of this company, particularly when it comes to their factories.
Sure, Tesla has lost some market share in the US BEV market, for lack of better word, but over the same period they have also gained some market in the overall US auto market share. If Tesla are still producing and selling 136,000 vehicles in a quarter, that means the competition are at around 73,000. Tesla are still selling just about twice all the competition combined.
How can that not be good?
If we compare Tesla’s market share in the US for Q4 to when they were closer to 80%, we can see that all other automakers combined produced 36,000 vehicles for the period. So, what does this mean? That suggests that the competition increased from 36,000 to 73,000 units between Q4 and Q2. That is really everything that has occurred here. You may use statistics to show that the competition’s sales have quadrupled in the last two quarters, but they aren’t likely to keep doubling every two quarters.
These battery and cell factories take a really long time to come online, and all these US BEVs are using nickel based cells, which are a lot more scarce. These legacy autos are having to partner with other battery manufacturers in order to make more cells. They are having to build massive factories in order to achieve this, that take years. Then even after that, they still haven’t caught up to Tesla’s 5 year old Model 3 in cost, range, performance or features.
Dropping in Demand
A lot of the narrative for Tesla losing market share, is based on Tesla’s demand dropping. Tesla have fulfilled the backlog and there are no new sales coming to grow the business. But if you check the wait times for Tesla’s in the US, then back in March this year there were wait times until September for a Model Y Long Range. That’s 6 months, and this is when the price was $60,000. The price has now risen to $66,000, and the wait time is now December to April. 2 to 6 months.
That is quite the discrepancy there between wait times. But this is a massive price increase, 10%. Which means there are a lot fewer buyers able to afford that price point. And that potential 2 month wait time may not look as good the previous 6 month wait time at the old price, but I think you’ll find by the time January comes around, we are up to at least a 6 month wait time again, once the tax credit comes in.
In fact what is interesting is that even when there was this price rise to $66,000, back in June, before there was any announcement of a tax credit the waiting list was January to April. That was a 7 to 10 month wait, even longer than when the price was lower. Sure the economy may not be as hot as it was back then, but to drop from a 7 to 10 month waiting list to 2 to 6 months, seems coincidental as soon as everyone suddenly realizes, they can save $7,500 if they just wait to order in January.
What will happen after that?
When the price is lower, demand grows significantly, and there is a lot of pent-up demand from those who didn’t want to order because they wanted to wait for the tax credit. Therefore, if the wait period at $66,000 was 7 to 10 months, how long will it be at $58,500? It may take up to a year. Additionally, people believe they are getting a better deal by paying $58,500 for a $66,000 car rather than paying full price for the Model Y at $56,000. It’s the same automobile, but the tax credit makes it feel like you’re receiving a lot greater discount, even if you’re paying more for it.
Q1. What is Tesla’s market share in the world?
In 2022, Tesla’s market share in new EV sales decreased to approximately 65%, down from 72% in 2021. During the fourth quarter of 2022, Tesla’s market share in the U.S. dropped to about 58%, a decline from almost 78% in the same period of 2021. Nevertheless, it was not widely anticipated that Tesla would maintain a market share greater than 70% in any global automotive market.
Q2. Is Tesla losing EV market share?
As Tesla continues to lose its share of the EV market, its prospects may become limited. In 2022, Experian reported that Tesla’s market share in the EV sector was 65.4%, which represented a decline from 68.2% in 2021 and 79.4% in 2020.
Q3. What is China’s market share of Tesla?
Tesla’s portion of the overall EV market in China – encompassing both battery-electric vehicles and plug-in hybrids – stands at roughly 10%, which represents an increase from 7% during the same period in 2022. Meanwhile, BYD’s market share has risen to around 45%, up from approximately 30% a year earlier. BYD is a manufacturer of both plug-in hybrids and battery-electric vehicles.
Q4. Is Tesla market leader?
Having sold almost 936,200 units in 2021, Tesla has been recognized as the top-selling electric vehicle manufacturer globally. This sales volume amounts to a market share of just below 14 percent.
Q5. Why is Tesla market share so high?
Tesla’s shares increased by up to 11%, building on an overnight surge prompted by optimistic statements made by CEO Elon Musk. Although analysts had a more diverse reaction, investors eagerly received Musk’s assertion that the electric-vehicle company could manufacture 2 million cars in 2023.
As a result, I would not estimate Tesla’s demand based on their present market share. However, I wouldn’t be concerned about Tesla’s market share; in the US, it boils down to the 4680 cell, and as soon as that enters large scale manufacturing, all of Tesla’s efforts to increase sales in the US over the previous two years will be realized. Now keep that in mind that Tesla has been working very hard to increase their sales in the United States, and they have spent approximately two years getting this new plant up and running, and it has made a small difference in output so far. Yet when it eventually kicks off, we will undoubtedly notice.