- Tesla’s share of the US electric-car market fell from 81% to 69% in February.
- The Mustang Mach-E was nearly the sole reason for Tesla’s market-share losses.
- Ford’s new electric car has been widely successful, winning awards and Wall Street’s approval.
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Ford’s electric Mustang Mach-E appears to be cutting into Tesla’s comfortable lead in the electric-vehicle market right out of the gate.
The Mustang Mach-E was the third highest selling electric car model in the US in its first full months of sales, according to a report from Morgan Stanley on Thursday. The car trailed behind Tesla’s Model 3 and Model Y in February.
While Ford has only sold 6,614 units of the new SUVs to date, Tesla’s share of the US electric-car market fell to 69% in February, down from 81% in the prior year, an earlier Morgan Stanley report dated March 3 found. What’s more, the Mustang accounted for nearly all of Tesla’s market-share losses, the bank said.
Ford’s first-quarter vehicle sales were up over 23% year-over-year, the automaker said Thursday, with electrified vehicle sales rising 74%, thanks mainly to the Mustang Mach-E and F-150 PowerBoost Hybrid sales.
Tesla’s first quarter numbers are expected to be released as soon as Thursday afternoon.
Despite the new competition – of which Ford is far from the only source – Morgan Stanley’s analysis found that Tesla’s US sales are still on the rise, with more car buyers continuing to look into purchasing an electric vehicle. EV sales in the US climbed 34% in February from the previous year, while traditional internal-combustion-engine-car sales dropped 5.4%.
One-fifth of the Mustang Mach-E’s sold in February were in California, Ford said, a key market for the industry. In 2019, the state accounted for nearly half of Tesla’s Model 3 sales.
So far, the Mach-E appears to be a success. The car was awarded SUV of the year by the North American Car, Truck, and Utility Vehicle of the Year Award in January, and early testers – including other Wall Street analysts – also gave it positive marks. JPMorgan said the vehicle could challenge Tesla inasmuch as Ford has more history and brand recognition.
“We do not aim to argue that one vehicle is necessarily superior to the other (many consumers will continue to prefer the Model Y’s greater availability of semi-autonomous driving features and Tesla brand, while others will be attracted to the Mach-E’s styling and availability of a $7,500 federal tax credit),” they said.
In March, Tesla CEO Elon Musk seemed to compliment Ford’s role in the electric-car market.
“Tesla & Ford are the only American carmakers not to have gone bankrupt out of 1000’s of car startups,” he tweeted in response to a reporter’s post about the high-risk nature of the automobile industry. “Prototypes are easy, production is hard & being cash flow positive is excruciating.”
-Elon Musk (@elonmusk) March 4, 2021
Some experts doubt Tesla can stay on top forever
Early Tesla investor and former board member Steve Westly told CNBC that competition was encroaching on the electric-car company from all sides.
“Tesla is not going to be king of the hill in electric forever,” he told CNBC last month.
Other car companies have also begun to crowd the market, from electric-car startups like Lucid Motors, Fisker, and Rivian to more established car companies like General Motors and Volkswagen.
In February, a J.D. Power survey of new car buyers found that many people looking to buy electric cars were considering companies outside of Tesla.
“One could argue this indicates that, while Tesla’s appeal is clearly formidable, it’s not absolute and could be displaced by a worthy alternative,” said Stewart Stropp, senior director of automotive retail at J.D. Power, in the survey.
Despite doubts as to the future of Tesla’s role in the EV market, Tesla’s shares have risen more than 650% in the past year in a vote of confidence from investors. The company’s revenue increased in 2020 from $24.6 billion to $31.5 billion, but it missed Wall Street’s fourth-quarter projections by 20%.
The company is working to compete in the market. The carmaker plans to design a $25,000 car and has expanded its manufacturing plants into China, building a Shanghai Gigafactory.
China is likely to remain a key market for Tesla and the industry at large. In 2020, Tesla doubled its revenue there.
“China is the linchpin of growth for EV market,” Dan Ives, an analyst at Wedbush, told clients in March. “We believe China could see eye-popping demand into 2021 and 2022 across the board, with Tesla’s flagship Giga 3 footprint a major competitive advantage.”