Tesla, the well-known electric vehicle (EV) company, faced an unexpected setback in the third quarter. This development highlights a few key points: Tesla is not impervious to competition, a diverse model lineup is necessary, and production must rebound.
According to the latest report from automotive data provider Cox, the total sales of battery-electric vehicles (BEVs) in the U.S. reached a record high of 313,086 units in the third quarter. This number represents an increase from 295,255 units sold in the second quarter and a significant jump from the 205,682 units sold in the same period last year (2022).
Year-to-date statistics reveal that nearly 867,000 BEVs have been sold in the U.S., marking an impressive almost 50% surge compared to the previous year. Additionally, BEVs accounted for approximately 8.3% of all light-vehicle sales, setting a new record for the country.
Although these figures bring joy to EV enthusiasts, Tesla's performance paints a different picture.
Tesla's vehicle deliveries totaled 156,621 in the third quarter, which represents a decline from the 175,262 deliveries in the second quarter. However, there was growth when comparing it to the 131,024 deliveries made in the corresponding period of 2022.
Consequently, Tesla's market share in the third quarter shrunk to 50%, a decrease from 59% in the second quarter and an even steeper drop from 64% in the third quarter of 2022.
So far this year, Tesla has delivered roughly 494,000 units in the U.S., indicating a year-over-year increase of approximately 26%. Nevertheless, its market share for this period stands at around 57%, down from 67% recorded a year ago.
The stock market did not experience notable fluctuations following this news. Tesla's shares only saw a modest increase of 0.2%, reaching $263.48, while the S&P 500 remained unchanged and the Nasdaq Composite exhibited a 0.3% rise.
The Changing Landscape of the EV Market
Investors are becoming increasingly aware that Tesla's dominance in the electric vehicle (EV) market is not immune to competition. While Tesla currently holds the lion's share, accounting for about 60% of the market, there are several other brands that are steadily gaining traction. In the third quarter of 2023, seven brands managed to sell over 10,000 units each, excluding Tesla. This marks a significant shift from just a year ago when only two brands achieved this milestone.
The brands making waves in the EV market include BMW, Chevy, Ford Motor, Hyundai Motor, Mercedes-Benz, Rivian Automotive, and Volkswagen. In 2022, Ford and Chevy were the only contenders alongside Tesla in this exclusive club. This increasing competition poses a challenge for Tesla as it strives to maintain its market share.
Tesla has already witnessed a decline in sales of its popular Model 3, with a year-on-year drop of 3.2%, resulting in 53,251 units sold. To counter this trend, Tesla has resorted to reducing prices for its Model 3 and is preparing to launch an updated version in the U.S. Interestingly, a refreshed version of the Model 3 is already available in Europe and China.
Apart from introducing updated models, Tesla's upcoming Cybertruck holds great promise. Investors are keeping a close eye on the vehicle's production ramp-up as it is expected to impact Tesla's market performance significantly.
Reduced production during the second quarter has also contributed to Tesla's loss of market share. The company produced 435,000 vehicles in the third quarter, a decline from the 479,700 units produced in the previous quarter. Much of this decrease can be attributed to planned production downtime for equipment upgrades.
Market share, production figures, and upcoming models will be the key focus areas when Tesla releases its third-quarter earnings report on October 18.
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