Tesla's EV Market Share Slips

Tesla's growth has cooled.

That's despite a round of price cuts and new federal tax incentives that favor its cars since they are built in the United States.

Vehicle registration data shows that the company had a year-over-year growth for January and February of 35 percent, but sales only grew 3.7 percent for those two months when compared to November and December of last year.

When 2022 began, Tesla had the top three EVs and four out of the top 10. The Model S fell out of the top 10 during the year, and the company's EV market share dropped to 58 percent in the first two months of this year. That's down from 72 percent in the same period in 2022.

There's increased competition, and not just from Ford's Mustang Mach-E. Chevrolet is the number two EV brand, and Volkswagen is in the mix. Increased production of the Chevrolet Bolt and Volkswagen ID.4, both of which undercut all Tesla models in price, means that the two legacy automakers are seeing their EV market share grow.

This shouldn't be shocking -- no matter how nice Tesla models are, or how much they're hyped, buyers will gravitate to what they can afford. With Tesla's competition offering cheaper EVs, folks who can't or don't want to spend luxury prices can get into an EV for less.

Not to mention Tesla's ongoing problems with quality and whatever impact Elon Musk's Twitter antics may have on brand reputation.

Musk has said Tesla needs to make its cars more affordable but has also blamed slowing growth on higher interest rates.

Tesla has also been slow to develop its much-hyped Cybertruck at a time when both legacy automakers and other startups have been bringing EV trucks to market.

It's not all doom and gloom for Tesla -- the Model Y, Model 3, and Model X all did see boosts from the price cuts. So it's really the slide of the flagship Model S that has hurt the company. The Model Y and Model 3 are eligible for the tax breaks.

Wall Street hasn't bailed, though -- the finance suits seem to think that the price cuts will help Tesla undercut its rivals. Indeed, the stock price is up 70 percent through April 10. Automotive analysts take a dimmer view of price cuts, noting that while they may help in the short term they aren't a long-term solution to ongoing problems and can actually hurt a brand's reputation (and resale value).

Regardless of who is correct, Tesla will be facing increased competition in the EV space from now on.

[Image: Tesla]

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