The forward march of Tesla halted?

EV in Focus recently noted that while Elon Musk may demand that his firm “should be thought of as an AI or robotics company — if you value Tesla as just like an auto company… it is just the wrong framework”, Tesla no longer has the luxury of promising automated driving jam tomorrow without a near-term roadmap for growing demand for its cars.

And demand for Teslas is looking pretty wobbly right now. Other recent blogs (Again and again and again and again) highlighted the wild inferences being drawn from seasonal sales trends in China, but Tesla’s flatlining has been visible for around 8 months. 

A share price which is predicated on steeply increasing future sales is coming under pressure, as investors begin to critically evaluate Tesla’s wider technology offering. 

Data from our Global EV Tracker - publishing month-by-month data on battery electric vehicles sales in 40+ markets - draws this out. We should caveat that we don’t have manufacturer data on every market, the US being the most significant omission, and France a lesser one. We’re working on plugging those gaps.

For all the ubiquity of Tesla amongst EVs on European roads, it’s actually a tiny market compared with China. Not quite a rounding error, but in volume terms, not big. 

Monthly Tesla sales by selected country, 1000s 

Whilst Tesla has seen similar slow periods in the past, this one has been going on for a pretty long time. And it doesn’t appear to be seasonal. Looking at the 12 month rolling average, sales haven’t really broken out of the 90-95K range since the summer of last year. 

Their sales aren’t falling in absolute terms. But in a global market where total sales of electric vehicles are increasing by around 15% a year (the Q1 2024 rise on the same quarter in 2023), they’re seeing a reduction in market share. 

You can see this by tracing the market share of Tesla in China, its biggest market in our analysis. It’s been squeezed by domestic manufacturers, from more than 22% market share in early 2021 to 14% today - a fall of more than a third. 

Market share of manufacturers in Battery EV sales in China

So the launch of the Model 2 - and the robo-taxi, if you’re into that sort of thing - can’t come soon enough. Because the Chinese market is increasingly competitive - . brands rise and fall at a rapid rate, and there are dozens of smaller market participants who still sell a lot of cars. The major Chinese manufacturers operating in Europe - SAIC and Geely - are not even top 10 players in China today. 

Whilst UK commentators sometimes seem to have a vision of monolithic state-sponsored manufacturers with their own monogrammed chairs in the politburo, it looks rather more like the idealised world of Western competition than the real thing does.

That’s a challenge - and not just for Tesla.

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