“My kids, when we get in the car, I say ‘Hey, grandpa had a Mustang back in the day,’” said Romanowski, who paid about $70,000 for a top-of-the-line model. “It’s kind of neat our family has had that lineage.”
Buyers such as Romanowski are helping new EV models chip away at Tesla’s long-running market dominance, just as Tesla founder Elon Musk is devoting much of his attention to a string of crises at another of his companies — Twitter.
Tesla still owned the lion’s share, 65 percent, of new electric light-vehicle registrations in the United States in the first nine months of 2022, according to S&P Global. But that’s down from 79 percent in 2020, thanks to a surge of competition, including from some lower-priced models, according to the data provider.
Ford is in second place, with about 7 percent of new EV registrations in the United States, followed by Kia at 5 percent and Chevrolet and Hyundai at 4 percent. Mercedes-Benz and others are rolling out EV models that are challenging Tesla in the luxury market.
And there are signs that Musk could be accelerating Tesla’s fall, as some former fans eschew his cars because of his combative management of Twitter and his embrace of some right-wing memes and conspiracy theories.
Concerns about weakening demand for Tesla, especially in China, the company’s second-biggest market, have contributed to a nearly 70 percent drop in the company’s share price over the past year, which has left some investors howling over what they perceive as their missing-in-action CEO. Tesla last month offered price cuts in the United States to juice demand, and, this month, it slashed prices in China for the second time as competition there mounts. But analysts say Musk needs to do more to stabilize the automaker.
“Musk must take a more hands on approach in 2023 at the company as the Twitter distraction along with this current demand situation is creating a perfect storm for the stock,” analysts at Wedbush Securities wrote in a report in the past week.
Tesla didn’t respond to a request for comment. Musk recently tweeted that he “will make sure Tesla shareholders benefit from Twitter long-term.”
Tesla still has some advantages over rivals. It has established a large EV production footprint, with four plants globally, while many competitors are still building their manufacturing capacity, according to Stephanie Brinley, an auto analyst at S&P Global Mobility. And Tesla is still planning to launch models, including the sci-fi-esque Cybertruck, the high-end Roadster and a model that Musk says will be less expensive than the company’s lowest-priced car today, the Model 3.
Brinley said it’s too early to make firm predictions about EV winners and losers in a fast-changing sector, with electric vehicles expected to grow from 5 percent of the U.S. light-vehicle market last year to 17 percent by 2025.
“As competitors come in, [Tesla] will lose share. It doesn’t mean they will lose prominence or volume. It doesn’t necessarily mean it will hurt their profitability. It’s just as more people come in, your share of the pie decreases, especially in a growing and dynamic market like this,” Brinley said in an interview. Tesla is forecast to sell about 800,000 vehicles in the United States in 2025, compared with 502,000 in 2022, she said.
Still, the longtime darling of tech enthusiasts has lost some of its sheen. Andrew James, an insurance-industry executive in the Minneapolis suburbs, said some of Musk’s public behavior, including his boosting of conspiracy theories, helped turn him off Tesla. About a month ago James bought a Mustang Mach-E instead, paying about $51,500.
“If you’d asked me two years ago if my next vehicle would be a Tesla, I would’ve said absolutely, 100 percent,” James said. “Elon’s kind of lost some folks, I think, with his recent antics. Not to get too political, but it caused me to explore some different options.”
Several other recent EV buyers said they chose non-Tesla cars simply because there’s much more competition these days.
Joseph Law of Springfield, Va., had owned a Tesla Model 3 for two years and loved it but wanted something bigger. After a test drive a few months ago, he spent about $54,000 on a Kia EV6. His boyfriend bought one, too.
“It came with a lot of features that were standard that with Tesla you had to pay for. It just seemed like it was the next logical choice, and it was bigger than the Model 3 I was driving,” Law said.
“The Tesla was my dream car honestly. … It was great owning it for the time I owned it. But I just wanted more,” he added.
The one drawback about the Kia, he said, is that it doesn’t qualify for a $7,500 federal tax credit because it is made outside of North America, in South Korea. The Mustang Mach-E, which is made in Mexico, does qualify for the tax break, as do Chevy’s electric models and some Tesla models made in the United States and priced below certain thresholds.
Steven Center, the chief operating officer of Kia’s U.S. business, said the lack of a U.S. tax credit could be a problem for the company’s smaller, less expensive EV, the Niro, because buyers in that market are more price-sensitive. Kia has announced that it will begin some EV manufacturing in the United States in a few years. And despite not benefiting from the current tax break, Kia’s EV business is booming, Center said.
“Customers that are buying the EV6 are new to the brand. They are high-conquest sales. They have the highest income of any customers we’ve dealt with. They are younger and better educated. Electric cars have been a huge change for Kia,” he said.
Justin Pace of Southlake, Tex., said he test-drove a Tesla Model 3 and a Mustang Mach-E about a year ago and preferred the Mustang. He said he bought one for himself “after reading a lot and liking the body-style look, the great reviews and the interior of the Mustang much more.” He later got a Mustang Mach-E for his wife, he said.
Darren Palmer, a top EV executive at Ford, said the company has not aggressively advertised the Mach-E yet because demand is still outpacing supply. That has led to long wait times for some buyers, which Ford is trying to reduce by increasing production to an annual target of 270,000 vehicles globally.
“We haven’t really marketed it at all or pushed it,” Palmer said. “It’s sold out, so no need.”