Tesla's U.S. growth cools, EV share falls

Tesla's growth cooled in the first two months of 2023, according to registration data, with its EV market share decreasing from 72% to 58% despite price cuts.

April 12, 2023 08:00 AM

BLOOMBERG

Tesla's growth cooled in January and February, according to new-vehicle registration data, and its share of the EV market fell sharply from 2022 despite price cuts and a new round of federal tax incentives that favor its U.S.-made vehicles.

Tesla had 95,829 new U.S. registrations for the two months, a 35 percent increase over January-February 2022 — but just a 3.7 percent increase from November and December, when it had 92,414, Experian data shows. Tesla's deepest price cuts occurred in mid-January.

At the start of 2022, Tesla reached a growth rate of 74 percent in the January-February period and had the nation's top three EV models and four of the top 10. But over the next 12 months, growth cooled, competition increased and the Model S fell out of the top 10, Experian numbers show.

"The market forces surrounding Tesla have undeniably shifted in the past 12 months and most of them for the worse," said Karl Brauer, executive analyst at iSeeCars.com. "Tesla's longtime role as the only premium EV has shifted to one of many options, with additional EVs arriving in showrooms every month."

Because Tesla doesn't break out its U.S. sales from global numbers, registrations serve as a proxy.

The Experian data tracks with Tesla's global sales numbers from the first quarter of the year. Tesla reported first-quarter deliveries of 422,875 for a 4.3 percent increase over the previous quarter. After last week's sales report, Tesla implemented a new round of price cuts.

Competitors grow

Tesla is still the dominant EV player by far, but the competitive landscape is changing.

Tesla's EV market share fell to 58 percent in January-February 2023 from 72 percent a year earlier, according to registration data, which showed non-Tesla new EV registrations rising 151 percent. Chevrolet and Volkswagen have seen their EV market share grow thanks to increased production of more affordable vehicles such as the Chevy Bolt and VW ID4.

Chevrolet, the No. 2 EV brand, delivered 8.5 percent of new registrations in the first two months of the year, and third-place Ford had 6.4 percent.

Tesla CEO Elon Musk has turned to price cuts in hopes of reaching 50 percent global sales growth this year amid easing demand. Musk has mostly blamed higher interest rates for lower sales growth but also said Tesla needs to make its vehicles more affordable to attract new buyers.

Tesla's hold on the premium EV market has given way to competition from legacy brands and startups, Brauer said. Rivals are matching Tesla's driving-assistance technology and launching fresher model designs. There are three EV pickups on sale from rivals as Tesla continues to develop its Cybertruck.

While Tesla can afford to cut prices because of its industry-leading profit margins, that may be a temporary fix, Brauer said. "No automaker has ever solved its problems with price cuts," he said. "And the tactic can also damage a brand over the long term."

New-vehicle registrations: Luxury

	Jan.-Feb. ’22	Jan.-Feb. ’23	Change
1. Tesla	71,188	95,829	35%
2. BMW	53,847	56,756	5.4%
3. Lexus	44,908	45,468	1.2%
4. Mercedes-Benz	39,587	41,727	5.4%
5. Audi	25,119	36,046	44%
6. Cadillac	18,878	24,768	31%
7. Acura	17,327	21,158	22%
8. Volvo	15,399	17,062	11%
9. Lincoln	12,774	13,203	3.4%
10. Land Rover	10,889	12,162	12%
11. Porsche	8,451	11,922	41%
12. Infiniti	7,787	10,427	34%
13. Genesis	7,927	9,233	17%
14. Jaguar	1,700	1,752	3.1%
15. Alfa Romeo	2,382	1,639	-31%
Total	338,163	399,152	18%

EV registrations: Top 10 brands

	Jan.-Feb. ’22	Jan.-Feb. ’23	Change
1. Tesla	71,188	95,829	35%
2. Chevrolet	92	13,919	15,029%
3. Ford	4,921	10,610	116%
4. Volkswagen	2,041	7,151	250%
5. Hyundai	3,999	5,105	28%
6. Rivian	321	4,295	1,238%
7. Kia	4,623	4,238	-8.3%
8. BMW	116	4,092	3,428%
9. Mercedes-Benz	1,248	4,004	221%
10. Nissan	2,868	2,822	-1.6%

Source: Experian

Intended results

Tesla's lower prices — along with the tax incentives — are delivering results for some models.

The Model Y crossover, which received a 20 percent price cut in January, saw its registrations jump to 57,583 in January and February, 71 percent over the same period last year, Experian's data showed. The Model Y was the bestselling EV in the U.S. by a wide margin.

Tesla's Model 3 sedan, which had a more modest price cut, had registrations of 32,411 in the period, a 15 percent increase, Experian said. The Model X crossover had 4,332 registrations, a 62 percent rise.

Model S registrations fell 78 percent to 1,503.

Only the Model Y and Model 3 qualify for tax incentives because of vehicle price caps.

Wall Street view

Wall Street analysts have mostly applauded the price cuts, touting Tesla's ability to undercut rivals who are unwilling or unable to sacrifice profit margins for volume. Tesla's stock price is up about 70 percent this year as of April 10.

Investment firm Baird reiterated its bullish stance on Tesla this week.

"We continue to believe Tesla will be able to maintain industry-leading operating margins and is in the best position among auto peers to weather economic headwinds," Baird said in a research note.

Tesla's EV competition in the January-February period was made up of 23 automakers which, combined, didn't crack 50 percent of the market, the registration data showed.

Chevrolet surged this year on sales of its Bolt EV and Bolt EUV, which have benefited from greater production, a sub-$30,000 starting price and the new federal tax incentives.

New registrations for the two Bolt models combined were 13,919 in the January-February period, Experian data shows. Because of a recall, Chevrolet sold fewer than 100 of them in the year-earlier period.

New EV registrations at Ford more than doubled to 10,610 in January and February combined. Ford's F-150 Lightning, at 4,617, beat the Rivian R1T pickup at 2,744 registrations in the two-month period.

Volkswagen was the No. 4 EV brand with 7,151 new registrations of its ID4 crossover, a 250 percent gain from a year earlier.

Hyundai had 5,105 registrations for fifth place. The Ioniq 5 crossover had 3,783 registrations for a 1.5 percent increase over January-February 2022. Hyundai lost access to the federal EV tax credit last summer under new rules that require vehicles to be assembled in North America. The Ioniq 5 is imported from South Korea.

EV startup Rivian was in sixth place with 4,295 new registrations, including 1,551 for the R1S crossover, which had zero registrations in January-February last year. Rivian also makes commercial vans for Amazon that are not included in the Experian data.

Kia had 4,238 EV registrations in the two-month period this year, an 8.3 percent decline. The EV6 crossover led with 2,586 new registrations, a 17 percent increase, while the Niro EV had 1,652 for a 31 percent drop. Kia also lost access to the incentive because its models are imported from South Korea.

BMW was in eighth place with 4,092 registrations, up from just 116 in January-February last year. The i4 sedan had 2,835, the iX crossover had 1,061 and the i7 sedan had 196, Experian said.

Mercedes-Benz had 4,004 registrations for ninth place, and Nissan had 2,822 registrations for 10th place in the two-month period. Nissan's new Ariya crossover had 1,141. Audi, with eight EV models, had 2,727 registrations. Polestar had 2,113.

Lucid Motors, which launched its Air sedan in 2021, had 1,063 registrations in the first two months of the year. Toyota had 983 from its bZ4X, and Subaru had 929 from its Solterra.

Lexus had three registrations for its new RZ crossover, its first EV, and Vietnamese automaker VinFast had one registration for its VF 8 crossover, according to Experian data.