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What do Tesla’s recent woes mean for the competition?

“It’s an opportunity for their competitors to continue to claw away at Tesla’s market share,” one auto industry analyst told Tech Brew.
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· 5 min read

This year started off on an inauspicious note for Tesla.

The Elon Musk-led company lost its title as the world’s top EV seller to Chinese EV maker BYD.

Then in Q1, Tesla reported its first YoY sales decline since 2020, as well as drops in profit and revenue, amid waning EV demand and growing competition.

The hits and perceived missteps kept coming: Mass layoffs and executive resignations. The rocky rollout of the long-awaited Cybertruck. The revelation that the Department of Justice is investigating whether Tesla committed securities or wire fraud related to the company’s claims about its self-driving vehicle tech, which is also under scrutiny from federal auto safety regulators.

Musk disappointed Wall Street by nixing hotly anticipated plans for an affordable EV in favor of focusing on his robotaxi ambitions. Tesla’s stock is down about 30% year to date.

But perhaps most puzzling of all was the news in April that Tesla had laid off nearly all of its Supercharger team—500 employees who worked on the company’s industry-leading EV charging business. The move immediately halted work on numerous charging station projects—a sign of the cuts’ broader implications for the buildout of EV charging infrastructure across the country. (Tesla later hired back some of the employees.)

Basically, it’s been a rough year for Tesla. The upshot, according to industry experts, is that competitors—from traditional automakers to EV startups to charging providers—now have a clear chance at stealing some of Tesla’s thunder.

Tesla didn’t respond to a request for comment.

Try and come for my market share

“It’s an opportunity for their competitors to continue to claw away at Tesla’s market share,” K.C. Boyce, VP, automotive and mobility and energy for Escalent, told Tech Brew. He pointed to recent Escalent data indicating that while Tesla is still “very highly considered” by consumers who are likely to buy an EV for their next vehicle, there’s a big difference this year in how many other brands they’re also considering.

“In previous years, it was often only Tesla or Tesla and one other brand that were being considered for an EV,” he said. “And this year it’s Tesla and, and, and…It’s a lot more competitive today than it was even last year.”

Because consumers tend to favor brands they already recognize and trust, the opportunity may be most ripe for legacy automakers, he said.

Boyce thinks it could be especially opportune for a pair of sister brands: “Hyundai and Kia are really well-positioned given the troubles at Tesla. They’ve kept their foot on the metaphorical gas as it relates to electric vehicles.”

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There’s room for startups to grab some market share, too, but some experts told us it might be tougher for them because they’re facing challenges of their own.

“As Elon Musk has pointed out many times,” John Tomlinson, director of research at M Science, said, “there’s very few auto companies that started up and survived over the past 100 years.”

Supercharger slash

After the Supercharger news sent shockwaves through the EV sector, Musk said that Tesla still plans to invest $500 million this year in expanding its charging network.

Even so, experts say the cutbacks will have major implications for the rollout of federally funded charging station projects, the pace of EV adoption, and the process of giving other brands access to Tesla’s network now that many are switching to Tesla’s charging connector.

Tesla operates the largest charging network in the US, with some 25,000 Superchargers. The company operates more than 60% of high-speed chargers across the country and, per Reuters, is the largest recipient of payouts from a $5 billion pot of federal funding to support construction of new charging stations.

Boyce predicted in a LinkedIn post that the layoffs would set off a wave of “serious buyers’ remorse (and frantic checking of contract terms)...at major OEMs” that had signed on to Tesla’s charging standard. He also wrote that he expects it to “delay Supercharger access for non-Tesla drivers that don’t currently have it.”

Loren McDonald, CEO of research firm EVAdoption, wrote on LinkedIn that “a slowdown in Supercharger expansion could mean that the total number of new stations and ports opened in the US in 2024 and 2025 would see flat growth for three years.”

“Fairly universally, people look at Superchargers as being the most available, the most convenient, and the fastest out there,” Boyce told Tech Brew. “It’s those perceptions that are influencing their decisions to buy or not buy an EV when they go to make their next vehicle purchase. So I think this move by Tesla really imperils overall EV growth, not just Tesla’s EV growth, because of those buyer perceptions and concerns.”

This provides competing charging networks like Electrify America with an opportunity to “step up and fill the game,” Boyce said, but “whether they will or not is another question.”

Keep up with the innovative tech transforming business

Tech Brew keeps business leaders up-to-date on the latest innovations, automation advances, policy shifts, and more, so they can make informed decisions about tech.