It simply can't keep up with the exploding EV market.
Tesla is losing a large chunk of its share in the EV market to sub $50,000 rivals. Most major manufacturers have been pouring cash into developing new models, and Tesla's time on the throne is ending. A recent study by S&P Global Mobility predicts that Tesla's market share will drop from 65% to less than 20% in 2025.
Tesla is one of the most valuable automotive manufacturers in the world and leads the EV charge with a lineup of impressive cars, stretching from the humble Model 3 to the massively powerful Model S Plaid.
The company's eccentric CEO, Elon Musk, has taken it on a wild ride in recent months, causing massive damage to its stock value, dropping from over 1 trillion earlier this year to 184 billion at the time of writing. The market cap is set at 577 billion.
Tesla remains the number one luxury car brand regardless of powertrain, but it is slowly losing its grip on both ends of the market, according to S&P's report. A base Model 3 is now close to $50,000, making it too expensive for young professionals looking to get into an entry-level EV.
Now competitors are taking up the sub $50,000 market once claimed by Tesla: rivals such as the Ford Mustang Mach-E and Hyundai Ioniq 5 are posting strong sales, and for below $30,000, the Nissan Leaf and Chevrolet Bolt offer outstanding value. The Tesla Model 3 and Model Y are the only two EVs to achieve registrations above 300,000 units in the first three quarters of 2022, showing that it still commands the market for now.
"Tesla's position is changing as new, more affordable options arrive, offering equal or better technology and production build. Given that consumer choice and interest in EVs are growing, Tesla's ability to retain a dominant market share will be challenged." S&P Global said.
At the other end of the market, established brands such as BMW, Audi, and Mercedes-Benz are coming for the high-end luxury segment, which has been dominated by the Tesla Model S.
"Luxury EVs from Mercedes-Benz, BMW, Audi, Polestar, Lucid, and Rivian, as well as big-ticket items like the Ford F-150 Lightning, GMC Hummer, and Chevrolet Silverado EV pickups will plague Tesla at the high end of the market," S&P Global said. "S&P Global Mobility predicts the number of battery-electric nameplates will grow from 48 at present to 159 by the end of 2025, at a pace faster than Tesla will be able to add factories," the research firm stated.
While Musk has teased a lower-priced Tesla for years, the market launch timing is unclear.
To counteract this loss of market share, Tesla continues to promise new models, such as the Tesla Cybertruck and a robotaxi service that is supposed to enter service by 2024. Tesla has also been expanding its Supercharger network and opening it up to other brands, which will further supplement its income. Though Tesla will lose sales, it's in no danger of going bust.
"Tesla today is the brand best equipped for taking advantage of the immediate surge in EV demand, though manufacturing investments from other automakers will erode this advantage sooner than later," S&P concluded.