Shakeup in the U.S. electric vehicle market, Tesla struggles to hold onto its dominant position

According to the Zhitong Finance and Economics APP, Tesla (TSLA.US) is about to lose a key record it has maintained for the past six years: surpassing the total sales of all electric vehicle competitors in the United States.

According to the latest data from Marklines, a provider of automotive industry sales data, in the 12 months ending in May of this year, Tesla sold approximately 618,000 electric vehicles in the United States, while other manufacturers sold about 597,000 pure electric vehicles. Next week, automakers will begin to release second-quarter sales figures, including hot new models from General Motors (GM.US), Hyundai Motor Company, and its affiliate Kia Motors.

Since the Model S luxury sedan surpassed the Nissan Leaf in 2015, Tesla has been the best-selling electric vehicle brand in the United States. Since the takeoff of the Model 3 in 2018, Tesla's electric vehicle sales have exceeded the total of other companies in the industry. However, after the initial slow response, traditional automakers have been steadily narrowing the gap. In the first quarter of this year, Tesla's sales fell by 13% year-on-year, while six of the top ten electric vehicle manufacturers saw astonishing growth in sales, with Hyundai/Kia soaring by 56% and Ford Motor Company (F.US) by 86%. This trend continued in April and May.

Tesla is set to lose its dominant position in the U.S. market

Or lose its dominant position

When this month's sales figures are released, Tesla may lose its dominant position in the U.S. market. Unlike other automakers, Tesla only discloses quarterly sales figures and does not disclose global sales figures by region. Analysts estimate the company's monthly deliveries in the United States using state registration data and international sales reports.

It is obvious that CEO Elon Musk's controversial political stance is weakening Tesla's dominant position. Stephanie Valdez-Streaty, Industry Insights Director at Cox Automotive, said that due to a significant gap in product cycles, 95% of Tesla's sales depend on two models. Competitors are entering niche markets that Tesla has neglected.

"Tesla is facing more intense competition now," Valdez-Streaty said. "Elon has indeed driven the development of the electric vehicle industry, but he is trying to compete with brands that are launching new models, while Tesla has not introduced any new models."

Surge in electric vehicle sales for most U.S. automakers


Not Just a Car Company

It is important to note that Tesla remains the largest electric vehicle manufacturer in the United States. In the past 12 months, Tesla's electric vehicle sales in the U.S. have been more than five times higher than its closest competitor Hyundai/Kia. Tesla also produces the best-selling electric car in the world, the Model Y, with more pure electric vehicles sold globally than any other company.

Despite a significant drop in stock price, Tesla is still the most valuable car company in the world. Tesla's market value is around $575 billion, less than half of its peak value of $1.2 trillion in 2021, but still nearly 85% higher than the second-largest automaker, Toyota (TM.US).

Some dominant tech giants in the market, such as Apple (AAPL.US), Google (GOOG.US), and Nvidia (NVDA.US), have market values exceeding $2 trillion. Like these tech giants, Tesla also has diversified ambitions. Musk has stated that compared to its clean energy business, Cybercab taxi service, and humanoid robots, its consumer car business will eventually pale in comparison.

Morgan Stanley analyst Adam Jonas stated last week that as long as investors view Tesla as a car company facing increasing competition, its stock price will be at risk. However, in the long run, Jonas expects Tesla's valuation to soar like other tech giants. "For Tesla, cars are like gaming chips for Nvidia. For Tesla, cars are like selling books for Amazon (AMZN.US)."

Currently, the automotive business accounts for over 90% of Tesla's revenue. It is worth noting that Nvidia and Amazon have been able to maintain dominance in the above-mentioned markets. However, in the electric vehicle sector, Tesla may not be able to achieve the same level of dominance