FASHIONISTA’S TAKE: TESLA DOMINATES THE ELECTRIC VEHICLE MARKET DESPITE COMPETITION
Tesla’s Model Y has emerged as the world’s best-selling car in the first quarter of 2023, solidifying Tesla’s position as the leader in the electric vehicle (EV) market. Legacy automakers, despite promising big increases in production and sales of EVs, have struggled to catch up to Tesla. Tesla is estimated to have sold 336,892 vehicles in the U.S. during the first half of the year, a 30% increase from the previous year. In comparison, Hyundai and General Motors are roughly 300,000 units behind Tesla. Despite their efforts, legacy automakers have not been able to bridge the gap.
While Hyundai and General Motors have seen notable increases in EV sales, they still remain far behind Tesla. Hyundai’s EV sales increased by approximately 11% in the first half of 2023, reaching 38,457 units. Similarly, General Motors quadrupled its electric car and truck sales to 36,322 units through June compared to the previous year. Volkswagen also made significant progress, more than doubling its EV sales to 26,538 units sold through June. Ford Motor, which was the second best-selling EV brand last year, ranked fifth with sales of 25,709 vehicles through June.
Tesla’s success can be attributed to the growth of its production, with a new plant in Texas coming online and ramping up. However, Tesla’s market share of U.S. EV sales has dropped nearly 10 percentage points from the previous year, now representing 60% of electric vehicles domestically sold. This decline in market share is in part due to the entry of more competitors into the market, resulting in overall market growth. U.S. EV sales increased by roughly 50% through June compared to the first half of the previous year.
While legacy automakers and newer companies, such as Rivian Automotive, have been attempting to increase their production of EVs, many of them have not been able to achieve significant outputs. Apart from the top spots occupied by Tesla, only five other brands have between 1% and 4% market share, and many others are below 1%.
Despite facing challenges, Tesla remains optimistic about its future. The company delivered more than 889,000 EVs globally in the first half of 2023, including 466,140 vehicles in the second quarter alone. Tesla aims to produce at least 1.8 million electric vehicles this year, with CEO Elon Musk stating that the Texas factory should become the highest-volume production auto plant in the U.S. once it is fully operational. The Texas plant is projected to produce half a million vehicles annually by the end of 2023.
Hyundai’s rise to the second-place position in EV sales is significant, considering that its vehicles do not qualify for federal EV tax incentives unless they are leased. This has put Hyundai at a disadvantage, as the incentives are meant to benefit EVs produced in North America. To navigate this obstacle, Hyundai has increased leasing of its EVs from 2% to over 30% to take advantage of the leasing loophole.
On the other hand, General Motors’ EV sales have been disappointing, particularly for its new models featuring the automaker’s “Ultium” battery technologies. Production of these newer EVs, such as the GMC Hummer and Cadillac Lyriq, has been slower than expected. The majority of GM’s EV sales during the first half of the year comprised outgoing Chevrolet Bolt models, which will be discontinued later this year. However, GM plans to catch up to Tesla in sales by mid-decade, with new mainstream EV launches on the horizon.
Overall, Tesla’s dominance in the EV market remains steadfast, despite increased competition from legacy automakers. While other brands are gradually increasing their EV sales, they still have a long way to go to catch up to Tesla’s lead. Tesla’s continuous growth in production and global deliveries positions the company as a frontrunner in the transition to electric mobility.