Musk’s Tesla dominates electric vehicle sales, but that could be coming to an end, according to an S&P report
Elon Musk’s Tesla dominates the electric vehicle space in the US, but that dominance could weaken in the coming years.
According to new research from S&P Global Mobility, more automakers will enter the market with lower-cost alternatives — particularly sub-$50,000 models “where Tesla isn’t really competing yet,” the company wrote this week.
“Tesla’s position is changing as new, more affordable options come out that offer the same or better technology and manufacturing setup,” S&P wrote. “With growing consumer choice and consumer interest in electric vehicles, Tesla’s ability to maintain a dominant market share will be challenged going forward.”
S&P projects that Tesla’s EV market share will fall below 20% by 2025, down from 79% in 2020, 71% last year and 65% this year (through the third quarter). By the end of 2025, the number of EV models sold by different companies will have increased from 48 today to 159. That means a lot more options for consumers and a smaller market share for Tesla.
“However, before you feel too bad about Tesla, remember that the brand will continue to see unit sales increase even as share falls,” Stephanie Brinley, associate director of AutoIntelligence at S&P Global Mobility, said in a statement. “The EV market in 2022 is a Tesla market and will remain so as long as its competitors are tied to production capacity.”
However, the research firm added that “production capacity will be addressed as automakers, battery makers and suppliers pour billions into that side of the equation.”
For example, Volkswagen’s new ID.4 assembly line in Tennessee has 20,000 unfilled reservations and a capacity of 7,000 units per month, S&P noted, and that alone “should significantly transform the EV volume picture.”
Tesla did not respond immediately assets Request for comments.
In Tesla’s third-quarter earnings call, Musk said Tesla is working on a more affordable new model after completing “engineering for Cybertruck and for Semi.”
“We don’t want to give exact dates,” he added, “but this is the main focus of our new vehicle development team.”
“Tesla has opened two new assembly plants in 2022 and is looking for the site for its next North American plant,” S&P noted. “Tesla is now the brand best positioned to benefit from the immediate increase in demand for electric vehicles, although manufacturing investments by other automakers will sooner or later erode that advantage.”
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