Tesla's dominance in the EV market is slipping, but it's not time for CEO Elon Musk to panic just yet.
Justin Sullivan/Getty Images
Tesla's dominance in the EV market is slipping, but it's not time for CEO Elon Musk to panic just yet.
Tesla's share of US electric vehicle sales in the second quarter fell to 49.7%, marking the first time its share had fallen below 50% in a quarter, according to data from Cox Automotive. The slip followed disappointing sales results and tough first-quarter financial results.
While Tesla is certainly facing its share of challenges right now, losing market share is a sign of something much less threatening to the company's future.
It's proof that Tesla is growing into a somewhat normal car company — a status it has worked hard to achieve — and that the segment it pioneered is finally maturing.
"Despite Tesla's declining sales, with its EV sales share now below 50% for the first time, the overall competitive landscape for electric vehicles is intensifying," Cox Automotive Industry Insights Director Stephanie Valdez-Streaty said in the company's EV sales report. "This increased competition is leading to continued price pressure, gradually boosting EV adoption."
Tesla's chokehold on the US electric vehicle market has been waning for a few years as more companies release their own electric models. Tesla commanded about 55% of the US EV market last year, down from 65.4% in 2022 and a much higher 79.4% share back in 2020, according to data from Experian.
While this share drop looks staggering, it's important to remember that Tesla had previously enjoyed virtually zero competition in the US.
Tesla's success over the last two decades has sent legacy automakers — like GM, Ford, and Volkswagen — scrambling to catch up with Musk.
For the past few years, the US market has seen the release of one "Tesla fighter" after another. Meanwhile, Tesla has continued to grow its fleet of options, while enjoying the benefits of attracting wealthy early EV adopters who initially dominated the segment.
The result today is that EV shoppers simply have more choices. Just in the second quarter, BMW, Cadillac, Honda, and Kia all offered new entries to the market, according to Cox. Many of these models are stealing market share from Tesla simply by existing.
Take Chevrolet for example. The bowtie brand is executing its plan to flood the EV market with new releases this year, and it appears to be paying off so far.
Cox credits new releases like Chevy's electric Blazer, Equinox, and Silverado with adding 21,000 EVs to the market and chipping away at Tesla's dominance.
Even as its market share diminishes and sales slow, Tesla remains the most dominant EV company in existence.
So far in 2024, Tesla is still the top seller of EVs with 304,451 deliveries through June, according to Cox. There's a seismic gap between Tesla and second-place Ford, which has sold 44,180 EVs so far this year.
Overall growth in the EV segment, regardless of Tesla's decline, also proves Musk right in his bet on electric vehicles more than a decade ago.
The EV market is still increasing in volume and share, just at a slower rate than when the segment first took off in 2020. And Tesla is still in a good position to benefit from that growth.
"The growth will, at times, be very slow, as all-time horizons in the automobile business are vast, but the long-term trajectory suggests that higher volumes of EVs will continue over time," Valdez-Streaty said.
