Analyst suggests Tesla is set to be crushed
The leading EV maker is expected to become smaller player
Elon Musk and Tesla have driven the electric vehicle (EV) market. The company sold a quarter-million EVs in the second quarter of the year. Musk has made predictions that he will increase his production rate by 50%. That success has made Tesla the leading EV maker in the world with 70% of the market.
A new prediction says that is about to change. The sleeping giants have awoken and are poised to displace Tesla and relegate it to a significantly smaller market share.
Tesla's Gigifactory in Shanghai has helped the company increase production levels. (Credit: Tesla)
BEHIND FORD AND GM?
The prediction comes from one of the top analysts of the automotive industry. Bank of America’s John Murphy puts out an annual Cars Wars report on the state of the industry. His latest report suggests that Tesla’s more than 70% market share last year will shrink dramatically to just 11% by 2025.
Murphy told the Automotive Press Association that Tesla had the market to itself, operating in a vacuum, and thought it couldn’t be caught. "That vacuum is now being filled in a massive way over the next four years by very good products," Murphy told reporters.
Murphy believes that Musk didn’t expand his lineup of cars fast enough. The Tesla Cybertruck has been delayed and Musk abandoned his promise to make a $35,000 EV. Murphy said, “a big miss on his part,” was Musk’s belief that legacy carmakers didn’t know how to efficiently manufacture. Musk ended up adopting many of the legacy techniques on the assembly line.
Tesla delayed delivery of its Cybertrucks until 2023. (Credit: Tesla)
Even though it appears Tesla has been growing fast, the analyst believes Musk could have grown much faster, and should have, by going to the capital markets. “He didn't move fast enough. He didn't recognize what was going on in the market and showed tremendous hubris that they would never catch him, they would never be able to do what he is doing,” Murphy is quoted in Car and Driver.
MARKET SHIFTS
“Had he taken advantage of that free capital and not had the hubris, he would have done more but didn't. That was a major, major competitive mistake,” Murphy said.
Murphy told CNBC that more than 100 new nameplate vehicles are coming and will push other manufacturers ahead of Tesla. The Bank of America research also suggests that by 2026 EVs and hybrids will account for 60% of all vehicles produced.
Bank of America's John Murphy on the waves of EV models on the way to the US market. (Credit: CNBC)
The winners will be Ford and GM, which Murphy expects to each grab about 15% of this new market. Both of the Detroit legacy carmakers have been bullish about their efforts to take on and pass Tesla as a leading EV maker.
CHASING TESLA
GM’s CEO Mary Barra has quietly been saying her company is coming for Tesla and market share, proclaiming her company will be the leading American EV-maker. Ford too has rushed to market with its Mach E and Ford Lightning truck and has ambitious plans for its next generation of EVs. Both Ford and GM are predicting they will produce about 2 million EVs in the 2025-2026 timeframe.
GM's Ultium platform that will be used for many of its EV models. (Credit: GM)
The Asian carmakers are also targeting Tesla’s market share. Toyota is hybrid-heavy but is increasing its all-electric offerings.
Tesla will continue to grow the number of vehicles it manufacturers. The overall market will grow dramatically. Tesla just won't own as much of that market.
Elon Musk has a target on his back and the legacy carmakers have him in their sights.
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(Cover image credit: NASA, Ford, GM)