Tesla’s EV Market Share Is Dropping Fast
jalopnik.com
jalopnik.com
In general, EV market share is a misleading metric since a decline for anyone holding a 100% market position is inevitable. Market share will drift downward as the number of deliveries from competitors grows; it doesn't seem rational to expect Tesla to retain 50+% of the US EV market share in the long term. Spinning that gradual decrease in EV market percentage as a dire concern reeks of an agenda.
It's also bizarre to focus on Model S, when Tesla's Q1 press release [3] says that Model S and X units are in transit overseas. S and X are manufactured in California and shipped to customers worldwide. Some of those customers have been waiting two years for their orders to be fulfilled. It's clear Tesla finally prioritized some overseas delivers of those two models to satisfy their shockingly-patient overseas customers. Contrary to the Jalopnik narrative, even with a large portion routed to other countries, US sales of S and X still exceeded popular media darlings (and good cars, mind you) such as the Rivian R1T (outsold by Model X) and F-150 Lightning (outsold by Model S).
[1] https://www.coxautoinc.com/market-insights/q1-2023-ev-sales/
[2] https://pbs.twimg.com/media/Fth_aAtXwBQDUvK?format=png&name=...
[3] https://ir.tesla.com/press-release/tesla-vehicle-production-...
That's huge right now, but the future for Tesla as company is in power generation and batteries. The cars are just getting them there. (though I thought that about the iPhone, so perhaps for once in a lifetime I might be incorrect :)
I was close to ordering a Rivian until I saw Ford dumped their ownership of the brand a few months back. I highly doubt they have the ability to scale and turn profitable without a major, driven backer like Ford or Elon. Which is a shame because the vehicles look beautiful.
Tesla is absolutely a premium brand, the cheapest vehicle Tesla offers is a base model 3 for $42,000. Where as a Nissan leaf starts at $28,000. Nissan actually understands how to build a widely affordable consumer model. Tesla only knows how to build “premium” vehicles with poor build quality and an autopilot that can’t stop running into fire trucks.
1. Excellent but north of $100K
2. Tesla
3. Solid EVs that are reasonably priced, but the wait list is > a year
4. Low range crap
The cars that this guy was talking about are in category 1, so, yeah, Tesla is actually the cheaper option.
Also, for the premium price of a Tesla, I expect things like the weather stripping and other basic features to top quality. They aren't--far from it in fact. All of the other EVs I drove had some elements of that same "all digital" poor design, but none of them had any apparent defects in the basic structure of the vehicle, or the poor steering, etc. And they were comparably priced (Rivian) or less expensive (the others, save Mercedes).
Now if you were complaining about Tesla's dearth of physical buttons you wouldn't get any argument from me...
In fact the Bulbs are burnt out for the backlights and I just never bothered to take the dash apart to fix.
The radio is a little more conplicated since it’s a CarPlay model. But all the functional controls are on the steering wheel (volume, next/last etc). So short of answering a call, or changing from a podcast to Plexamp I rarely have to divert attention.
In Model 3 and Model Y, it is clear that Tesla is cutting corners where it can & the gap between those and a Model S Plaid is stunning.
The Rivian, EQS, Mach E and Taycan were head and shoulders above my Model 3, but also in a slightly different price range.
My car feels like a Toyota with a Tesla touchscreen the way it feels inside (at least it understands my accent when I ask it to change the temp on voice). The Kia EV6 GT is probably a close comparison or the new Prius in the way it looks.
Definitely overpaid to get access to the highway Supercharger network. My friends drove from SF to Chicago round-trip in a Model 3 in the winter break and when Tesla starts charging Rivians everywhere, it will be somewhat of a game changer.
Because of that, I think Tesla as sort of a Ford meets Exxon, they make a trickle of money off the chargers, more if they have CCS - I'm actually waiting for them to stab me in the back and ship a Tesla with a standard CCS, making me carry around a "dongle" to charge my old model.
But by the time they perfect their software my car won’t receive updates anymore.
The market as whole is getting larger. Not only is that great, but it's also exactly Tesla's mission statement - Accelerating the World's Transition to Sustainable Energy.
Tesla is helping the competition even more by starting to open up their reliable charger network.
Pretty much this. Sad clickbait title which draws on a statistical fact that is insignificant.
Be it because you have fewer customers or because more customers are in the market but buying other options, your share of the market is now smaller. It doesn’t always mean you’re losing revenue but it is a sign that you’re losing an advantage
You claim market share is significant. I'm saying it's not.
If Tesla had 100% market share, they wouldn't be able to produce the cars for people. It's a silly metric in that it doesn't accommodate for what a manufacturer is capable of.
Their market share being smaller is thus, not important as the parent commenter pointed out their factories are pumping out cars full throttle and there's still wait lists for their products.
When the market is saturated with products, a metric like market share, customer happiness/retention, brand loyalty etc become more important. For now it's not as they were literally the only significant player for the past 5 years mass producing EVs.
https://companiesmarketcap.com/automakers/largest-automakers...
Not saying that's gonna happen with Tesla, I'm not making that bet, but who's to say how it will turn out they could drive outsized margin from their peers with some mix of brand (not that Elon's been helping lately), differentiators and software add-on. In an industry where revenues are very high and margins very competitive (low), each percent of margin gained is really meaningful.
https://en.wikipedia.org/wiki/History_of_Tesla,_Inc.#Timelin... (growth)
That's what people are betting on. Not just that Tesla will beat Toyota in electric cars.
While valued at 3x. The valuation still doesn't add up, though the debt issue is a decent point.
> It matters how much profit you make and TSLA has the highest margins on EVs of any company.
They've certainly enjoyed high margins while they were the primary game in EV town. But they're not anymore, and it remains to be seen what distinguishing features will let them command high margins in a newly competitive market. The slashed prices seem to indicate they're not sure they can do this either.
> Toyota is way behind EVs
Toyota had EVs on the road before TSLA was founded. They didn't focus on the hybrid game because they couldn't do it. They did it because they understood hybrids would (and did) dominate practical concerns during a transition period, and they were rewarded pretty strongly for that bet up through 2020 given that market's greater size than straight EVs through that time and their majority ownership of that market. They'll handle the shift to EV emphasis just fine. By somewhere around 2030 they'll probably be selling more EVs than TSLA and likely with similar margins but more effective manufacturing because they're very, very good at that.
My statement that Toyota had EVs on the road before Tesla was born is not based on any degree of confusion between hybrids and EVs.
https://en.wikipedia.org/wiki/Toyota_RAV4_EV
You can argue about specific capabilities, you could even argue about what it means that Toyota worked with Tesla on models in the 2010s. But whatever you think of Toyota's strategy since 1997, it was a choice, not a lack of capability, not ignoring the capacities of pure EV tech.
As for whether they "screwed up," well, hybrids proved to be pretty popular, probably around twice as many of them sold as EVs through 2020ish, and Toyota dominated if not outright made that market. Even if hybrids eventually decline, that kind of win over two decades is something most businesses would take gladly, and my bet would be that hybrids will remain a non-trivial portion of the market even as EVs grow. There's going to be markets/applications where charging is inconvenient or unreliable for a while yet.
Meanwhile, since (a) pure EVs are easier from an engineering standpoint and (b) Toyota has been making investments in the fundamental tech and engineering capacity for 25 years and (c) they're over a decade into plug-in hybrid territory (where the difference between hybrids and EVs gets especially narrow) and (d) their public roadmap has them ramping up ... I don't think the game they're playing is best described as "catch up" so much as "good timing."
But hey, you want to bet on Tesla, be my guest. I thought it was a good bet myself 12 years ago, not sorry. Less so since 2020.
And if you wanted to support some not-complicated just-wrong point, you should have picked something else, because Hollis is correct about many of their points in that article. Definitely regarding practical concerns surrounding refueling for many use cases / markets on a 2019-2024 horizon. And the author's closing paragraph where he basically insists the charge-at-night what-else-is-there-to-think-about use profile fixes all concerns makes him look as narrow as someone insisting fuel cells really should be taking off now any day now.
Hollis's statements about EV demand are also essentially correct circa 2019. "No demand" overstates the point, but he's entirely accurate for his market when he says "demand for electric is less than it is on hybrid." 2018 and 2019 were the first years EVs really started to look competitive domestically and they were still lagging hybrid sales substantially (we're only now getting to the point where EVs sold are basically at parity with hybrids).
And even there he's openly saying EVs are part of their roadmap but that they intend to follow demand, not try to lead it.
If there's something Toyota was wrong about demonstrated by the article, it was their bet they could lead the market to pick up on the advantages of fuel cells like they led the market to gas-electric hybrids. I'm not even sure they were wrong about the advantages, but clearly they weren't able get the market to follow them.
If that's what "they just got this one wrong, it's not complicated" really looks like to you, tell me some more areas in which I can bet against you.
Tesla PE is 50x, and Toyota PE is 10x.
Purely on the basis of earnings: If Tesla can 5x their sales (in a rapidly expanding market) while maintaining some of their pricing power, they'll be comparable to Toyota purely on the basis of multiples. The sales needn't come exclusively from automobiles either... And then there's equity-to-debt: Tesla has $3B USD in net debt; Toyota has $153B USD in net debt -- i.e. Toyota's enterprise value would be significantly higher if they had Tesla's debt load.
Margins are not going to hold for Tesla. They had the privilege of being the only strong EV vehicle on the market. Those days are gone. They had a certain cache as a luxury-ideal brand; that's been deeply eroded by a reputation for iffy finish quality and a certain high-profile personality's choices. And if their falling prices are any indication, Tesla knows that its high margin days are numbered if not outright over, and they're headed towards being just another manufacturer.
Toyota's US market share for all autos is around 15%.
So I don't think this data point says much about whether Tesla will end up with a larger slice of the pie than Toyota currently has, at least in the US.
They aren't vertically integrated to the same extend as a producer, explorer, refiner and distributor of oil such as Exxon.
Super chargers are dispensers. They get the electricity from somewhere else. And they most of the time don't own the land the dispensers are built on either.
https://insideevs.com/news/318545/tech-crunch-what-it-takes-...
So far Tesla has inconsistent and sometimes very poor quality, horror stories of poor support, overpromising and under delivery on self-driving while dramatically raising its price, a CEO who can’t show up, constant optimization of their offer focused on cutting cost and maximizing profitability instead of securing the position of best-in-class and focusing on long-term customer loyalty (I find myself always going, “which sensors did they remove this time?”), and price increases followed by dramatic price cuts and a history of willingness to straight up just screw over recent customers with dramatic price drops.
I wanted one until all that went down. Now, I wouldn’t buy a Tesla if it was half the price. I know there’s a lot of Tesla bulls on here, but I can’t be the only one who’s just not interested in all that.
Tesla as a company is also constant drama, drama, drama. I just want my car to quietly work for a few decades without surprises.
So, the numbers might look good but the way I feel — and it’s subjective — is that what Tesla is all about is not something we want in our lives. Musk has overpromised and underdelivered on key features of the Tesla. He spent the last decade promising "that driverless Teslas are right around the corner."
But even beyond all that, I just don’t like the company direction and behavior anymore — they’ve lost me as a customer. And I know quite a few people who feel that way.
Plus, I don’t find them very comfortable to sit in. Coming from Mercedes, Honda and Toyota ownership, I just really didn’t like the interior comfort.
Not a rant against Tesla, but it’s honestly my perspective. I think Tesla is in trouble a bit, even though I see healthy margins and think the article is a lot of hooey generally. But I wonder if I’m in the minority on this stuff, because I do hear people with similar feelings to my own on fair occasion.
That is an impressive stance, if taken literally. Half a full spec model 3 is $26,000. I'd put up with a lot of shit for a vehicle with that performance and range for $26,000.
I'm not trying to start an argument with you in particular, but I find these kinds of stances almost as confusing as the opposite. No car company is good by any ethical or even engineering standpoint. People just need to pick the car that works for them and live their lives.
Hopefully the competition ramps up significantly in the next few years and quality across the board increases.
The size of the US EV pie doubled and Tesla's growth didn't. But while Tesla's share is not yet in freefall, the trend is quite alarming. The group growing share is fractionated.
https://www.greencarreports.com/news/1134120_tesla-is-losing...
Tesla can both lose market share and continue doubling sales year over year. Both are true when you are measuring market share of the "EV market" which is still single-digit percentages of the overall auto market.
If their sales are increasing and market share is dropping that signals that incumbants have been dragged kicking and screaming into the EV market
As an investor in TSLA I dont understand why this is presented as a negative outcome, its quite literally what they are attempting to do by making their patents open.
Chart here: https://pbs.twimg.com/media/Fth_aAtXwBQDUvK?format=png&name=...
https://www.counterpointresearch.com/global-electric-vehicle...
I think there's a real question as to how much marketshare Tesla will have in the future. As you note, Tesla may have dragged incumbents into the EV market kicking and screaming. That doesn't mean Tesla will end up as a winner in that market.
Right now, Tesla has a market cap of $572B. That's 3x more than Toyota and nearly 7x more than Volkswagen (#2 and 3 by market cap). Let's say that Tesla becomes the next Toyota in 10 years. To an extent, that means Tesla being worth significantly less in 10 years than today. It seems more likely that Tesla would end up in the Mazda to Volkswagen part of the market - $5B to $85B.
Maybe Tesla will have amazing margins that never fade. That seems unlikely. Companies generally can't hold onto margins without significant ways of keeping out competition. What is keeping a competitor from creating a similarly appealing vehicle forcing Tesla to lower prices and margins? I'm not saying that Tesla doesn't have some advantages. Their early investments in EVs put them in a good position. However, those advantages probably aren't going to last a decade.
This is bad news for Tesla because as the incumbents ramp up their EV offerings, Tesla's share of the pie is going to continue shrinking. Right now, it's 62% and there's barely any competition. As competitors actually get models to market, things might change fast. Chevy will be getting their Blazor and Equinox EV SUVs to market soon. Hyundai and Kia are ramping up their EV options. VW will likely be introducing more. Ford can't keep its F-150 Lightning in stock, but will be ramping up EV capabilities. Not only the incumbents, but new players like Rivian and Fisker are getting into the game. The Chinese Polestar (owned by Geely via its purchase of Volvo) is bringing its vehicles to the US. It might only be a matter of time before BYD joins.
What does Tesla look like in a decade? Are they selling more cars than Toyota is today? I doubt it - not even because of any judgment about Tesla; it's just that the odds of any company (no matter how great) achieving that are just so small. I think the most likely outcome is that Tesla's margins fall as they need to lower prices to deal with a newly competitive EV market, they continue growing, and they become a successful car company like BMW. But BMW isn't worth $572B. There's even a case to be made that they'll end up more like Honda, worth less than a tenth of what Tesla is worth.
This is bad news because it means that once other EVs are available, Tesla becomes a smaller share of EV sales. As more models become available and competitors get better at it, Tesla's marketshare will likely fall to that of a normal car company. That wouldn't be a problem if Tesla were priced like a normal car company (or priced like a company that could become a normal car company in a decade). The problem is that Tesla is priced like it's going to take over the entire auto industry leaving every company dead in its path.
Tesla has won their argument: that EVs are a viable vehicle. That's very different from winning from the perspective of an investor.
I would say, that Tesla has nothing to do with it. Governmental regulations and mandates are responsible for that.
Without Tesla we might still have low volume "compliance" EVs and manufacturers would be lobbying that such regulations would be impossible to meet or detrimental to the auto industry and its part in the economy.
If they make the charging network robust and equally reliable as Teslas supercharger, it'll be game on.
Tesla is opening its superchargers to others [1]. I’m surprised we haven’t tied tax credits to interoperability yet.
[1] https://www.cnet.com/roadshow/news/select-tesla-supercharger...
> In February, the company announced its plan to open a portion of its network of charging stations to other manufacturers' vehicles, in order to align with the Biden administration's plan to create a national grid of over 100,000 public chargers.