BofA Expects Tesla's US EV Market Share to Fall to 18% as Rivals Ramp Up Production

Bank of America analysts predict that Tesla's share of the US electric car (EV) market will fall to 18% in 2026, compared to 62% by the end of 2022. Rival automakers are ramping up production.

Tesla's share of the US EV Market fell in 2018 as well. It was 75% in 2020 and 71% in 2021. Elon Musk's company reached its highest market share in the US at 78%.

In absolute terms, however, the story is different. Last year, 484,351 Teslas were registered in the US, which was 41% more than the year before.

This anomaly is easily explained by the increase in EVs in the US, which accounted for 5,6% of all registrations in 2018. That's a huge jump from the 3.1% market share they held in 2021 or the 1.8% in 2010. Electric cars made up around 10% of all car sales globally last year, which was a milestone.

Tesla has been increasing its US deliveries despite a decline in market share.

Tesla's production ramp up is an impressive success story. Even Charlie Munger acknowledged that the company's achievements in the auto industry are a "minor miracle."

Musk said that Tesla could produce as many as 2,000,000 cars if all goes well.

TSLA delivered more than 422,000 EVs in Q1 2023. Musk predicted that the company would have a production capacity of 20 million EVs by 2030, which is more than twice what Toyota sold in 2013.

Bank of America predicts Tesla's US market share will fall to 18%

Tesla now ranks among the medium-sized carmakers in terms of absolute size.

Zach Kirkhorn, Tesla's CFO, said during the Q1 2023 earnings conference that the company focuses on total market share rather than EV market shares.

In the US, its market share has risen to around 4%. This puts it in front of Volkswagen. Tesla's Model Y, excluding pickups, was the most popular model in the world during the first quarter.

BofA predicts that Ford and General Motors will each have 14% of the US electric vehicle market by 2026. Ford and General Motors had a market share of 8% and 5% respectively in the US EV Market last year.

Both companies are increasing their capacity. Ford anticipates a 2 million annual EV production capacity by the end 2026. General Motors will have a 1 million car capacity by 2025.

General Motors is the first Detroit-based automaker to have committed to a future with zero emissions. It has also announced that it will no longer sell vehicles powered by internal combustion engines after 2035.

BYD is the market leader in NEVs

BYD is the world's largest seller of New Energy Vehicles (NEVs), which includes both Battery Electric Vehicles (BEVs), and Plug-In Hybrid Vehicles (PHEVs).

In Q1 2023, the Chinese EV giant surpassed Tesla in terms of deliveries and sold 125,000 additional vehicles. Tesla still leads the BEV market globally, but it is not a surprise.

BYD has been backed by Berkshire Hathaway, and Munger called it his best investment. BYD offers models at different price points. Its Seagull hatchback, for example, starts just over $11,000.

Tesla is working on an affordable vehicle platform that it could unveil later in the year. Model 3 is currently its cheapest and costs around $40,000 per vehicle in the US.

Rebate of $7,500 less
Minus $1,500 subsidies.

A gen 3 would cost around $10,000. The running costs are almost negligible.

-- Tesla Economist (URL) June 16, 2023

After accounting for all state and federal incentives, the actual price in California can be as low as $23,000.

Tesla announced earlier this month that all Model 3 variants in the US are eligible for an EV tax credit of $7,500. This news has helped to support the rally of TSLA's stock, which is now up by 141% this year.

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