Tesla’s market share in the U.S., its home turf, has fallen below 50% for the first time. Sales have declined despite the local electric vehicle (EV) market growing by double digits. The company’s position is being undermined as it sticks to its existing lineup while competitive automakers introduce new EV models ahead of it. Tesla’s use of Chinese-made batteries has led to its exclusion from tax deduction benefits.
According to automotive market research firm Cox Automotive, Tesla’s share of the U.S. electric vehicle (EV) market for the second quarter (April-June) was preliminarily estimated at 49.7%. This marks a decrease of 9.6 percentage points from the previous year’s 59.3%, and it is the first time Tesla’s quarterly market share has dropped below 50%. Sales for Q2 are estimated at 175,000 units, representing a 6.3% decrease compared to the same period last year. This figure is calculated based on Tesla’s global sales. Tesla had previously announced that it sold 444,000 units in the Q2 global market, a decrease of 4.8% compared to the previous year.
The U.S. EV market is on the rise, with sales increasing by 11.3% during the same period. Compared to the previous year, this double-digit growth clearly indicates the market’s potential. The quarter saw a record of 330,000 units, further highlighting the rapid expansion of the U.S. EV market.
The intensified competition within the U.S. EV market, due to the increased supply and diversity of models, is a key factor in Tesla’s sales decline. The Alliance for Automotive Innovation’s report, representing nearly all automakers excluding Tesla, reveals that over 100 EVs are currently sold in the U.S. market. This abundance of options has decreased prices, making EVs more accessible to a wider audience.
Cox Automotive stated, “A few years ago, Tesla didn’t have many competitors, and pretty much no other company could match its cars’ driving range on a full charge or acceleration. But established carmakers have been introducing electric vehicles that can travel 300 miles or more, equaling and sometimes exceeding the capabilities of Tesla’s cars.”
Tesla’s sales decline is also blamed on its relatively small service network compared to traditional automakers. More customers are choosing EVs sold by conventional automakers, which can provide immediate maintenance and repairs due to their large service networks.
The aging of the sales lineup is also being pointed out as a problem. With the emergence of the latest EV models, the Model Y, which has been Tesla’s best-selling brand since its launch in 2020, is now classified as an outdated standard EV model in the industry.
Local tax deduction policies are also impacting the industry. In January, the Tesla Model 3, a budget sedan, was excluded from the tax deduction benefits under the U.S. Inflation Reduction Act (IRA) because it used Chinese-made battery components. As a result, Tesla replaced the battery origin of the Model 3 long-range model in May, but the sales incentives of other automakers are still about nine times higher than Tesla’s.
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