Is Tesla’s Market Share Limited Due to Competition?

I was having a WhatApp chat with family member about Tesla and competition from other EV makers. I figured it was worth sharing here.

This is a fun topic. šŸ™‚ Globally, EVs as a share of the market is in the low single-digit %. Likely around 1-2% (edit: it’s 3%). Some countries like Norway it’s much more. So as more car makers bring more EVs to the market, it’s not about them competing only with Tesla, it’s about the whole market making the shift. There are going to be billions and billions spent transitioning from gas to EVs in the coming decade: cars, trucks, vans, etc. The weight and cost of batteries has, in the labs, hit a point where battery powered planes are within reach. The single biggest problem every EV maker has is battery supply. So Tesla will be one of many companies with products to take advantage of this buying wave. It’s a BIG pie.

Because the big car makers are so many years behind Tesla, it seems like it’s “Tesla against everyone”, but it’s not – Tesla will be one of many options in the EV market. Just like there’s no expectation that one gas car company would ever be able to have 100% of the market, neither will Tesla. They just control a large % of the EV market as it stands today, but the EV market is so tiny still globally.

Think about Toyota. In 2020 they were about 9% of the US market in sales. You’d never think Toyota was a failure as a car company – you see their cars everywhere – so let’s say Tesla “only” sells 9% of all EVs in the USA. That would still be an incredible business! I personally think they’ll control 2-3x the market share of Toyota if they can keep going.

They’re like Apple from a brand perspective. Few people are buying a Nissan Leaf because they want to; if they could afford a Tesla they probably would buy one. Tesla has never paid a cent in advertising. It’s really hard to overstate how much of an advantage that is. And if they can get a $25K car into the market by 2022-2023, that will open up a new market for them.

Remember Tesla is fundamentally an energy company trying to get the world off fossil fuels and they chose to make cars their first product to show people that battery-powered vehicles could be exciting and efficient.