S&P Report Predicts Tesla’s Decline Due to Rising Competition


On November 29, a report by S&P Global Mobility shook the electric car market. The report claimed that while Tesla is the top-selling EV brand in the US, it is slowly losing its position as upcoming rivals offer better, cheaper alternatives.

The data firm found that Tesla’s market shares of new registered electric vehicles in the US stood at 65% through the third quarter, down from 71% last year and 79% in 2020. The report comes amidst concerns by investors that Tesla CEO Elon Musk is neglecting the EV maker as he concentrates on revamping his latest acquisition, Twitter.

S&P report on tesla
Tesla’s Model 3 has faced tough competition from new EV entrants. (Tesla cars; Image Credit – Tesla)

S&P Report Hits Tesla Where it Hurts

The S&P forecast on Tesla’s declining market share has left investors worried. According to the report, Tesla’s market share will continue to drop in the coming years. They estimate Tesla to lose by nearly 20% by 2025, as rivals flood the market with more options for the budget-conscious buyer. By 2025, EV models are expected to be around 160 compared to the 48 available today.

“Tesla’s position is changing as new, more affordable options arrive, offering equal or better technology and production build,” said S&P in the report. “Given that consumer choice and consumer interest in EVs are growing, Tesla’s ability to retain a dominant market share will be challenged going forward.”

The data firm also reported that Tesla’s models, although highly efficient, are not exactly budget-friendly. Tesla’s entry-level Model 3 has starting of around $47,000 with additional fees, and goes up based on your requirements. Even the Model 3 is now facing tough competition from the carmaker’s Model Y crossover.

The EV market has witnessed a boom in recent years, with cheaper, durable options available for under $50,000. In the third-quarter earnings call in October, Musk admitted that the electric carmaker is working on producing cheaper models, but did not give any timeline for the release.

Stephanie Brinley, associate director of AutoIntelligence for S&P Global Mobility, mentioned that despite a declining market share, Tesla is expected to hold its own.

As governments across the world offer attractive subsidies and tax breaks to EV makers, there has been an uptake in innovation and more vehicles are expected to hit the road in 2023.

In May, Tesla was kicked out of the S&P 500 ESG Index as the company’s “lack of a low-carbon strategy” and “codes of business conduct”, along with allegations of racism and harassment leading to lawsuits at his California factory, affected its score. Furthermore, in February, the company settled with the Environmental Protection Agency after years of Clean Air Act violations, wherein it failed to track its own emissions. A big deal for a company that produces EVs to battle carbon-emissions.

Promoted a world-class electric, Tesla’s choices that do not align with environmental standards have also caused analysts to question the company’s end goal. In recent times, discerning customers have opted for Tesla, as it is an electric car that helps reduce carbon emissions and mitigate the effects of climate change.

Tesla’s Beef with Twitter

When Elon Musk’s Twitter deal went through, Tesla investors expressed concern that the billionaire might not be able to juggle three companies. Musk is also the chief executive of SpaceX.

Musk is known for directing all his energies and manpower to right a company when it is struggling and in its nascent stages. He had done the same for Tesla in 2018. So, it came as no surprise when he admitted that he is working and sleeping at Twitter’s San Francisco headquarters until the social media site is fixed.

The billionaire’s penchant for working endlessly during a crisis is what saved Tesla. But now, as he diverts his attention to Twitter, investors are worried that Tesla will bear the brunt.

Their fears aren’t completely unfounded as Musk’s management of Twitter led to Alyssa Milano expressing her anger by exchanging her Tesla for a VW Ev. The CEO’s reply to Milano then ignited a Twitter storm that did not do much for either of them.

Tesla’s shares have dropped by nearly 50% since early April, when he disclosed he had taken a stake in Twitter. Earlier this month, Musk took to Twitter to reassure stakeholders that he “has Tesla covered too.” However, recent reports and happenings have given investors legitimate cause for worry, as Tesla flounders in Twitter’s wake.

The post S&P Report Predicts Tesla’s Decline Due to Rising Competition appeared first on Industry Leaders Magazine.

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