Tesla’s Grip Loosens as EV Market Faces Speed Bumps

Henry Hoenig
· 4 min read
Tesla’s share of the electric vehicle market slipped again in the third quarter of this year, falling to the 50% threshold, as rising numbers of EV buyers opted for less expensive models as well as offerings by luxury brands such as BMW and Mercedes. 
While Tesla’s sales rose 26% through the first nine months of the year, five of the 10 brands with the best-selling EVs saw their sales more than double from the same period last year.
The further erosion of Tesla’s market share comes amid slowing EV sales growth overall. Total EV sales rose 49% through the first three quarters of this year from the same period in 2022, down from 55% for all of 2022, despite a flurry of deep price cuts from Tesla and other automakers and the introduction of a $7,500 federal tax credit for many EV purchases this year.
To be sure, that’s enviable growth in almost any market. But many analysts see the slowdown, however modest, and
rising inventories
on dealer lots as indicators of headwinds in the journey toward mass adoption of EVs in the U.S.

Key Insights

  • U.S. EV sales totaled 873,000 through the first three quarters of 2023, putting them on pace to top 1 million annually for the first time. Still, the year-on-year sales growth of 49% registered during the first nine months of the year marked a slowdown from the 55% growth recorded for all of 2022.
  • In California, the U.S.’s biggest EV market, sales are on pace to rise 30% this year, roughly half the increase seen in 2022 and the smallest since 2020. This indicates a possible plateau ahead in the U.S. state with the highest level of EV adoption and perhaps a deeper slowdown in EV adoption nationwide.
  • Tesla’s sales during the first three quarters grew 26%, the third-slowest rate among the 10 best-selling brands this year. Tesla’s share of the EV market fell to a new low of 50% in the third quarter, when its sales rose 20% from the same quarter last year.
  • Still, Tesla’s Model Y and Model 3 remained the two best-selling EV models. The Model Y, now the
    world’s best-selling car
    , has sold six times as many units as any other non-Tesla vehicle this year, with sales rising 55% year-on-year during the first three quarters of the year. The Model Y accounted for 34% of all EV sales during the period.
  • Sales of the Model 3 rose at a more modest pace of 6.2%, but the total of 53,000 units was good enough to account for 19% of all EV sales in the U.S.
  • The more affordable Chevrolet Bolt ranked third in EV sales through September, with 16,000 units, which perhaps played a role in the company’s reversal of its decision to scrap the model entirely.
  • Sales of five of this year’s 10 best-selling brands — Chevrolet, Rivian, BMW, Mercedes and VW — more than doubled from the same period last year. Mercedes’ EV sales more than tripled and BMW’s nearly tripled.
  • Luxury brands dominate the list of car makers with the most EV sales as a percentage of overall vehicle sales. In the third quarter of 2023, BMW ranked first, with EVs accounting for 15.6% of its sales. Audi (12.7%) and Volvo (12.6%) ranked second and third, respectively. (Tesla, Rivian, Fisker, and Vinfast make only EVs, so aren't on the list.)
EV Brand Sales 2 X
Luxury car makers Mercedes and BMW have enjoyed dramatic growth in EV sales during the first nine months of the year. Kia was the only automaker among the top 10 in EV sales that suffered a drop in sales from a year earlier.
EV Brands Sales Growth 2 X
Though its sales growth was more modest than some of its upmarket rivals, Hyundai grabbed the biggest chunk of new market share during the first three quarters of the year. It was followed by BMW and Mercedes.
EV Brands Q 3 Segment Change 2 X
Tesla’s Model Y is not only the best-selling EV in the U.S., it’s the best-selling car in the world. The Model 3 ranked as the second-best-selling EV, with sales more than three times as high as the third-place Chevy Bolt.
Among the 10 best-selling models, sales of two declined during the first three quarters of the year: the Kia EV6 (-16%) and the Tesla Model X (-7%).
EV Models Sales 2 X
BMW and Volvo both placed two models on the list of 10 EVs that saw the biggest sales growth during the first nine months of 2023. Even amid a price war, only two of the 10 vehicles on the list—the Volt and the VW.ID4—had a manufacturer’s suggested retail price of less than $50,000.
EV Models Sales Growth 2 X
Iconic luxury brands comprise seven of the 10 car makers with the highest share of EV sales as a percentage of overall vehicle sales, one reason that EVs remain pricier than their ICE-powered counterparts.
Brand EV Sales Pct 2 2 X

Conclusion

EVs now account for 7% of all vehicle sales in the U.S., well within the
5%-15% range
that has been a tipping point toward mass adoption in other countries. But that doesn’t mean there won’t be bumps in the road along the way. While
half of American drivers
say they are interested in buying or leasing an EV as their next vehicle, price and range anxiety remain significant barriers for many buyers. The average EV price has fallen more than 20% from June 2022, but it remains nearly 10% higher than the average vehicle price, and there aren’t many options at the low end.
The sharp drop in sales growth in California this year indicates that the “early adopter” phase of the path to an all-EV market may be coming to an end. That leaves the harder work of offering more affordable vehicles, greater driving range and more convenient charging options to potential EV buyers who are more reluctant than those who have gone before them.

Methodology

All sales data came from Kelley Blue Book (KBB). Figures were estimates based on registration data.

Easiest way to compare and buy car insurance

√
No long forms
√
No spam or unwanted phone calls
√
Quotes from top insurance companies
Find insurance savings