Tesla loses traction in the world’s fastest growing EV market

The pandemic has made evident who in the car industry is better prepared and who struggles. While the majority of OEMs from Europe, USA and Asia try to find ways to face the unprecedented crisis, some others, usually young companies, have gained momentum. Many Chinese car makers and Tesla are among the latter group. Nevertheless, Tesla has lost traction in Europe, the world’s current fastest growing EV market.

Tesla has been a referent in the EV market since 2013, when the brand started to gain visibility in USA. They are the most popular car brand within the EV market thanks to their advanced technology, lots of marketing, and very competitive products; also because there has not been a direct rival anywhere. Until now.

European brands grow faster in Europe

Despite the big COVID-19 hit, the demand of pure electric cars is growing in Europe more than anywhere else. Registrations of electric passenger cars in 23 countries totaled 320,500 units through August 2020, up by 53%. The massive growth contrasts to strong decrease posted by gasoline and diesel cars, down by 40%. Consequently, the BEV market share jumped from 2.0% in Jan-Aug 2019 to a record of 4.5% this year.

In contrast to the general belief, the growth in Europe has not been driven by Tesla but by its competitors there. The arrival of more competition to Tesla Model S, Tesla Model X and Tesla Model 3, along with more affordable BEVs, has changed the game in Europe. According to the latest study conducted by JATO Dynamics, consumers in Europe can chose from 60 different BEVs; in 2016, there were only 28 choices.

Tesla’s market share in Europe’s BEV market was 14% in Jan-Aug 2020; its market share was 27% in Jan-Aug 2019.

After the introduction of Tesla Model 3 in early 2019, the US maker started to lead in Europe without any direct competition. However, the dominant position started to change this year when Audi, Peugeot, Renault, Volkswagen, Hyundai and Kia launched new and more competitive cars. Tesla’s market share in Europe’s BEV market was 14% in Jan-Aug 2020; its market share was 27% in Jan-Aug 2019.

Lack of direct competitors in China and USA

The situation in Europe is different from the one in China and USA. The locally-built Tesla Model 3 has allowed the brand to gain market share in China up to the point that it is now the top-selling electric car. In USA, the situation is quite different: the lack of direct competitors and lower interest from consumers towards BEVs, allows Tesla to keep the dominance.

What’s clear now is that Tesla is not alone anymore. It keeps ahead of its competitors in terms of battery efficiency and technology, but other big OEMs are learning fast and are now closing the gap with more appealing products. Tesla faces the premium brands threat in Europe, and the issue of not having a popular car in China.