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Tesla's Decline in U.S. Electric Vehicle Market Dominance

Tesla's Decline in U.S. Electric Vehicle Market Dominance

Tesla’s U.S. electric vehicle market share fell below 50% for the first time in the second quarter of the year, according to recent estimates from research firm Cox Automotive. Tesla’s share fell to 49.7% from 59.3% in the same period last year. The decline is notable as battery-powered vehicle sales have hit record highs during the same time frame.

From April to June, Tesla faced increasing competition from General Motors, Ford, Hyundai, and Kia. Cox Automotive estimates, based on filings, company reports, and other data, highlight this shift. The latest quarter marks a significant milestone, as it is the first time Tesla’s market share has fallen below 50% in a single quarter.

Despite Tesla's decline in market share, overall U.S. electric vehicle sales increased 11.3% from a year earlier. More than 330,000 electric cars and light trucks were sold or leased, accounting for 8% of all new vehicle sales, up from 7.2% a year earlier. That indicates strong consumer interest in electric vehicles, even if the market isn't growing at last year's rate of more than 40%.

A few years ago, Tesla had few rivals. Its vehicles’ range and acceleration capabilities were unmatched. But established automakers have now introduced electric models that can travel 300 miles or more, matching or exceeding Tesla’s offerings. There are now more than 100 electric models available in the U.S., according to a report from the Alliance for Automotive Innovation. Increased supply and variety have driven down prices, making electric vehicles more accessible.

Stephanie Valdez Streaty, head of industry insights at Cox, highlighted the impact of intense competition, saying it is driving price pressure, which in turn is driving the gradual increase in electric vehicle adoption.

Consumers are increasingly turning to electric cars from traditional automakers like BMW and Ford, which have large dealer networks for maintenance and repairs. Tesla’s online sales model, coupled with a limited service center network, has posed challenges for some customers seeking vehicle service.

Tesla's sales have also been affected by its aging model lineup. The Model Y, Tesla's best-selling vehicle, was introduced in 2020, making it relatively old by industry standards. In contrast, Hyundai and Kia offer newer, more competitively priced electric models.

General Motors has recently accelerated the launch of vehicles specifically designed to be electric, rather than converting gasoline-powered models. GM is also using U.S.-made batteries through a joint venture with LG Energy Solutions. The electric Chevrolet Equinox, expected to sell for about $35,000 before a $7,500 federal tax credit, is expected to launch soon.

Tesla’s global sales fell 4.8% in the second quarter, to about 444,000 vehicles. While Tesla does not provide country-specific sales figures, Cox Automotive estimates that U.S. sales fell 6.3% to 175,000 vehicles in the same period.

Elon Musk’s public political stances, particularly his alignment with right-wing politics on his social media platform X, may have affected Tesla sales. Electric vehicle buyers tend to be liberal, and sales are highest in states that typically vote Democratic.

Although the growth rate of electric vehicle sales has not met the expectations of some automakers, the market is still expanding faster than that of gasoline vehicles. Hybrid vehicles, which do not rely on the developing public charging network, have also seen faster growth recently.

Not all automakers reported sales gains. In the second quarter, brands such as Mercedes-Benz, Polestar, Porsche and Volvo reported declines in electric vehicle sales compared to the previous year, according to Cox. The company plans to release detailed sales and market share data soon.

By Otilia Peterson

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