Will Tesla’s EV Dominance Soon Be Tamed?

Everyone is gunning for Tesla in the car world. It’s not surprising, considering how rapidly the company has become the poster child of electrification, and how (deliberately) annoying Elon Musk is on social media. But recently analysts have been arguing that soon incumbent carmakers will be usurping Tesla’s EV market share and reasserting their global dominance.

A recent report from the Bank of America – amusingly called Car Wars – has claimed that over the next four years Tesla’s current 70% share of the EV market will drop to 11%, with General Motors and Ford racing ahead to 15% each. At this point, 2026, the analyst who wrote the report, John Murphy, expects EVs to be 40% of the US market, which totaled 3.3 million cars in 2021.

It’s a bullish prediction, when Ford sold 15,527 BEVs in the second quarter of 2022 in the US, GM sold 7,217, while Tesla sold… 254,695. The necessary rapid growth isn’t impossible, but that’s quite a head start to overcome in just a few years. Both Ford and GM have only just started selling EVs in volume, and of course Ford has the F-150 Lightning to challenge for a key US market, pickup trucks, whereas Tesla’s alternative, the Cybertruck, is still far from release. However, while GM’s Chevrolet Bolt has been well received, and the Hummer EV is now starting to arrive, most of GM’s brands are still waiting to be electrified.

The reasons for John Murphy’s predictions are based on how Tesla is now failing to keep up with demand. The aforementioned Cybertruck slippage is just one example. The much-discussed $ 25,000 Tesla appears to have been shelved for the time being, too, and everything has been quiet on the new Roadster front as well for a while. Murphy reckons Musk hasn’t moved fast enough building products across a range of vehicle types, leaving time for incumbent brands to catch up.

It’s not other American automakers that could be the real threat, though. Recently, Chinese BYD surpassed Tesla for EV sales in 2022. While Tesla sold 564,000 cars for the first half of the year, BYD sold 641,000. Korean brands Hyundai and Kia, both part of the same group and sharing EV platforms, are releasing highly acclaimed new vehicles like the IONIQ 5 and EV6, with further models imminent. Luxury partner brand Genesis is also now releasing some very promising EVs. Nissan has been on sale with its venerable Leaf, but is now adding the much more exciting Ariya SUV.

The European manufacturers are taking EVs very seriously now, with increasingly full ranges appearing from BMW and Mercedes. Stellantis has managed to find popularity for its brands in Europe, despite almost all its cars seeming to use the same electric powertrain from compacts to large cargo vans. The company does have a host of new EV platforms in the wings, but the ambivalence of Stellantis CEO Carlos Tavares towards electrification has left many to question his company’s future. Renault is still carrying on with its venerable Zoe, on a shared platform with the Nissan Leaf, but has a new electrified Megane imminent, on a shared platform with the Nissan Ariya.

The European company that is likely to challenge Tesla’s dominance most of all, however, is Volkswagen Group. Its ID.4 may have been slipping sales in the US in Q2, but globally it has been faring well. In 2021, Volkswagen Group sold 452,900 BEVs across all its brands, which includes Volkswagen, Audi, Skoda, Cupra, Porsche, and commercial variants including MAN. Tesla sold 936,172 vehicles in 2021, which is more than twice as many. But Volkswagen Group has been much later to the party, so this result is significant. Volkswagen Group also has models in areas that Tesla doesn’t, such as the Volkswagen ID.3 and Cupra Born.

The one thing that none of these predictions consider, however, is the lead Tesla has in core platform technology. Yes, the company has a bad reputation for manufacturing quality (although ironically this does not appear to be true of cars made in China). Its minimalist, plasticky interiors are an acquired taste and its exterior designs rather generic in appearance. But its platform is still years ahead of the competition. A couple of years ago, automotive benchmarking company A2Mac1 estimated to me that the lead Tesla had was about 6 years.

No other company rolls out over-the-air (OTA) updates as frequently and seamlessly as Tesla. Those companies that even have OTA updates rarely add significant new features in the way Tesla does. This is because other manufacturers’ cars tend to be much more complicated, with far more disparate subsystems to make compatible with new software features. None of them have their full attention on EVs, either, as they attempt to squeeze the last remaining profits from their legacy ICE ranges. In the UK, the Model Y has entered the top 10 of all vehicle fuel types for 2022 already. It’s expensive, but no other SUV in its class offers the interior space, range and performance.

It’s questionable how much competition really matters in a market growing as fast as EVs anyway. In the UK, BEVs were the only vehicle type that grew in sales volume in June, with every other fuel type dropping compared to June 2021. The UK – and Europe in general – is adopting EVs faster than the US now, but there is so much opportunity in this market, there are many successful businesses to be built serving it. A smaller part of a much bigger pie can still be a lot of pie. It’s satisfying for some to predict figures that imply the demise of Tesla. But not only are those figures optimistic to say the least, who wants to live in a world with just one brand of car anyway?

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