For years now, Tesla Inc. (NASDAQ: TSLA) has been synonymous with electric vehicle (EV) innovation and market dominance. However, this is about to change. The company’s dominance is being challenged in various countries across Europe and the United States even after a stellar performance last year.
A recent report from JATO Dynamics revealed how the American multinational automotive company is experiencing declining sales and market share amid growing competition. The data showed that in the first half of 2024, Tesla sales dropped by 8% and 13% in the U.S. and Europe, respectively.
Usually, a decrease in sales doesn’t mean a loss in market share, but in Tesla’s case, that is what it means. In Europe, the company’s sales volume dropped from 185,200 units to 161,300 units, signifying a decrease in market share from 19.8% to 17.2% in the battery electric vehicle (BEV) space. Likewise, Tesla saw its sales dip from 324,900 units to 299,200 units in the U.S., while its market share fell from 59.8% to 51.2%.
However, Tesla wasn’t the only car company that experienced declining sales in Europe in the first half of 2024; Volkswagen Group also suffered a significant loss. The German car manufacturer faced the highest decline in sales share, from 14.16 % to 12.7%.
So, what is the reason for this decline? Experts believe several issues could be the cause. First, Tesla’s product lineup, while revolutionary in its time, is aging. Models such as the Model S introduced in 2010, the Model 3 in 2017 and the Model Y, now five years old, face stiff competition from upcoming and fresh models from rival automakers.
Secondly, Tesla’s strategy to aggressively lower EV prices is becoming old news. Even though the strategy introduced in 2023 boosted sales, it no longer works. Reports show it faces diminishing returns, considering that other car makers are also lowering theirs.
Newer entrants, particularly those in China such as XPeng Motors, BYD and NIO, that are producing cost-effective models, have made price competition more pronounced. In Europe, the competitive landscape has intensified significantly. Premium German brands and increased offerings from Chinese EV makers create tough competition. Similarly, established car makers such as Ford and Hyundai are ramping up their games here in the U.S. In the period when Tesla was experiencing a decline in sales, it experienced a substantial sales increase.
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