Americans buy Tesla, not electric vehicles. Here’s why that’s about to change
The logo marks the showroom and service center of the American automotive and energy company Tesla in Amsterdam on October 23, 2019.
Jean Thys | AFP | Getty Images
Americans don’t buy electric vehicles, they buy Tesla.
This has been a relatively true statement for American consumers in recent years, with Tesla accounting for the majority of electric vehicles sold, 79% of which in 2020, according to IHS Markit. But that is starting to change as carmakers and so-called mainstream start-ups invest billions in a slew of new electric vehicles to compete with Tesla.
The influx of electric vehicles – from a few dozen today to hundreds of new models estimated by 2025 – is expected to eat away at Tesla’s market share in the years to come. New electric vehicles are expected as major automakers, such as General Motors and Volkswagen, shift to building electric vehicles almost exclusively over the next decade.
âIt’s no surprise that Tesla still dominates sales of electric vehicles as they are the only ones with truly booming viable products,â said Michael Fiske, associate director of IHS Markit. âIn a growing market, it is extremely difficult to maintain a majority market share, regardless of the sector. â¦ As we start to move towards a bigger and really bigger number of manufacturers going to play in space, Tesla has to lose some share. “
Tesla’s all-electric vehicle market share this year is already expected to drop to 56% in 2021, as new vehicles such as the Ford Mustang Mach-E and Volkswagen ID.4 have been introduced, IHS Markit said.
The research and forecasting firm expects Tesla’s U.S. all-electric vehicle market share to be 20% in 2025, when LMC Automotive also expects General Motors to outperform Tesla as largest seller of electric vehicles in the country.
2021 vs 2030
Tesla’s current dominance is in a relatively insignificant market. Despite the attention and hype surrounding electric vehicles, sales of all-electric electric vehicles and plug-in hybrids – which include electric motors as well as an internal combustion engine – remain minimal. Sales of electric vehicles, including plug-in hybrids, are expected to account for less than 4% of sales in the United States this year, according to industry forecasters. Of these, all-electric models – like the Teslas – only represent 2.6% of the market, or about 394,000 vehicles, according to LMC.
âAs you move up, it doesn’t take long to get big enough volume and share growth,â said LMC Americas President Jeff Schuster. “For the auto industry, this is a massive backbone and growth.”
LMC expects electric vehicles to account for 34.2% of new vehicle sales in the United States by 2030, all-electric at 30.1% and plug-in hybrids at 4.1%. Some of the more pessimistic estimates, from AutoForecast Solutions, predict that electric vehicles will account for around 23% of the market by 2030, with 18.6% of sales in the United States for all-electric cars and trucks. IHS Markit expects electric vehicles to account for about 40% of the US industry by 2030.
While analysts and forecasters differ on how many EVs will be sold this decade, they agree adoption will be swift, but likely not meet President Joe Biden’s executive order for half of the new vehicles sold in the country will be electric vehicles.
âIt is very optimistic to reach 50% by then,â said Tony Salerno, general manager of automotive analysis and consulting at JD Power, citing challenges such as consumer education, infrastructure for load and support the US power grid. “I think it will eventually get there from a utility standpoint, but it’s still early days and there are a lot of pieces to the puzzle we need to figure out to get there.”
When Biden announced the order earlier this year, which was referred to more as a âfriendly goal,â automakers didn’t fully agree. Many, including the Detroit automakers, have said they aim to “achieve sales of 40 to 50 percent of annual U.S. electric vehicle volumes” by 2030.
“It won’t happen. Mainly because it’s an unexplored market. Nobody really knows how many there are,” said Sam Fiorani, vice president of global forecasting at AutoForecast Solutions. “No one really knows how deep the market is right now. If you take Tesla out of the picture, the market is less than 1% of EVs.”