Tesla’s market share is going up even as its sales are going down
Elon Musk might be right — in a way — about the end of the federal EV tax credit.
Earlier this year, Tesla CEO Elon Musk argued that the end of federal subsidies like the $7,500 EV tax credit would ultimately be good for Tesla. He might have been right — in a way.
“I guess there would be, like, some impact. But I think it would be devastating for our competitors and would hurt Tesla slightly,” Musk said on the company’s second-quarter earnings call. “But long-term, probably actually helps Tesla, would be my guess.”
Afterwards, Tesla posted a record quarter, as buyers rushed to purchase vehicles before the tax credit expired. Now, in the final quarter of the year, the company is dealing with the aftermath: sales are widely expected to drop without the credit, and that pulled-forward demand means less demand now.
New monthly US sales data from Cox Automotive confirms that Tesla’s sales are declining — but reveals a surprise: its market share is rising.
At the end of the third quarter, the last with the federal credit, Tesla’s market share had slid to 41%, down from about 80% five years earlier. But in October it jumped to 55%, and in November to 57%, even as absolute sales fell from more than 60,000 in September to under 40,000 in November. The reason? Tesla’s sales are dropping — just not as fast as everyone else’s.
“The subsidy removal essentially stress-tested every brand’s underlying demand, and Tesla’s decline was significantly smaller,” Cox Director of Industry Insights Stephanie Valdez Streaty told Sherwood News. “Whether that’s due to brand strength, infrastructure advantages like the Supercharger network, or simply less price-sensitive buyers is debatable, but the market share result is mathematical: when everyone declines, whoever declines least gains share.”
Other major automakers have also seen far steeper declines in EV sales as they pull back from an increasingly difficult market. And alongside ending the EV tax credit, the federal government is also reconsidering and rolling back emissions rules that had pushed automakers toward electrification.
GM announced that it was cutting back EV production in response to decreased demand.
Stellantis scrapped its plans to produce only electric vehicles by 2030.
Meanwhile, some pure-play EV makers are spotting opportunity in the retreat of legacy competitors.
“I would say in the medium to long term, it actually simplifies things for Rivian,” Rivian CEO RJ Scaringe recently told an audience at the Rotary Club of Atlanta. “Narrowly and myopically through the lens of Rivian, it actually creates less competition.” (Rivian’s market share has also ticked up, though not as much as Tesla’s.)
In other words, the end of the EV tax credit may be pushing major automakers to scale back their EV ambitions — creating an opening for EV-only companies to capture a larger, if shrinking, piece of the market.
