Cars and Drivers

Tesla Still Owns the EV Future

Douglas A. McIntyre

Published: January 24, 2024 10:00 am

Upcoming Tesla Inc. (NASDAQ: TSLA) earnings may show that margins have dropped, most likely because of discounting. Revenue growth may have slowed due to a decline in the rate of electric vehicle (EV) adoption. However, Tesla has no real competition in the United States and Europe. Huge legacy car companies in both markets have tried and failed to become market share leaders.

For Tesla, China is another matter. BYD dominates the EV market there, becoming the largest EV company in the world due to that. However, it will be very difficult for BYD to move into the United States and Europe. That is because nations have started to erect barriers to China’s EV battery use by other manufacturers.

The U.S. market is instructive. The two companies with the best odds to challenge Tesla are the long-time “big two” American auto companies: Ford Motor Co. (NYSE: F) and General Motors Co. (NYSE: GM). Both have spent billions of dollars on EV development and planned to spend billions more. Each has retreated recently because of poor demand. An unanswered question is whether this is a lack of demand for Ford and GM EVs or for EVs in general.

Tesla’s model line is old. That should be solved by a new, less expensive car in the offing and the new Cybertruck. Pickups remain the top-selling vehicle in America. Tesla now has a product in that huge niche. (Here are five reasons to avoid Tesla’s Cybertruck no matter what.)

Tesla has turned to discounting to keep its market share. Some investors frown on that. However, the move may not be because sales are slowing. It may simply be because Tesla wants its market share to be high, as other companies drop out of the running due to failures of their expensive plans.