Tesla's Reign Continues but Rivals Are Closing the Gap: What’s Really Happening in the EV World

The electric vehicle (EV) market kicked off 2024 with what seemed to be a sluggish start. First-quarter sales reflected notable industry trends, including automakers like Ford dialing back expansion and Tesla's surprising decision to cut 10% of its workforce. Despite these early bumps, the EV industry is far from faltering. In fact, six of the top ten EV manufacturers in the US have reported sales surges ranging from 56% to 86% over the same period last year, according to Bloomberg.

Stephanie Valdez-Streaty, the director of industry insights at Cox Automotive, commented on the varied performance amongst brands. “We’re observing growth in demand, but it’s uneven,” she stated. “Tesla and Ford currently lack fresh models to entice buyers, whereas Hyundai, BMW, Kia, and Cadillac are making significant strides forward.”

General Motors (GM) and Tesla encountered particularly rocky starts to the year. GM retired its best-selling Chevy Bolt before its successor models were ready, and Tesla halted Model 3 production temporarily for a facelift. Nevertheless, excluding these, EV sales in the U.S. for Q1 still increased by a healthy 23% compared to the previous year.

GM’s Future Plans Could Change the Game

Looking to the future, GM aims to be a critical player in the US EV scene. With plans to launch electrified versions of major brands like the $35,000 Equinox SUV, Blazer, Silverado, and GMC Sierra electric pickups, all featuring next-gen Ultium batteries, GM is placing a big bet. CEO Mary Barra envisions the company producing 200,000 to 300,000 Ultium-based vehicles this year, a huge leap from the 5,800 Cadillac Lyrics sold in Q1.

Barra has a balanced view on the excitement and skepticism surrounding EVs. “The hype might be overblown, but the skepticism is equally unwarranted. The truth lies somewhere between,” she noted.

Long-Term Projections Remain Positive

Despite immediate concerns, long-term forecasts for the EV market remain encouraging. The International Energy Agency predicts US EV sales will climb from 1.1 million in 2023 to 2.5 million in 2025.

Tesla, dominating half of the US EV market, faces a potential uphill battle due to its heavy reliance on the Model 3 and Model Y for 95% of its overall sales. Aside from a future Roadster and possibly more affordable models next year, the company has announced few new options. Tesla's Cybertruck, which is currently only available in a $120,000 founders edition, further adds layers of uncertainty.

Charging Infrastructure Developments

Additionally, Tesla’s decision to open its Supercharger network to competitors and subsequent staff layoffs in the Supercharger teams have sparked questions about how prepared it is for broader usage. Elon Musk has since clarified that while expansion will proceed at a slower pace, Tesla has re-employed several team members to ensure ongoing developments.

Corey Cantor, an EV analyst at BloombergNEF, argued that mass production is vital for maintaining momentum in the EV market. “Automakers may be overreacting, but there’s definitely a Tesla issue. If they aim to capture more market share or maintain a high performance level, mass production is non-negotiable.”

No other US automaker has yet hit the milestone of selling over 100,000 EVs annually, with Tesla being the sole exception. Yet, this year, Hyundai, GM, and Ford target that benchmark, marking a pivotal moment in the US EV race. Additional players like Stellantis, Hyundai, and Honda are also expanding their EV portfolios.

Industry Trends Look Promising

This year, both US and global EV sales are projected to rise by about 20%, which is slower than the explosive 46% growth of 2023, but still indicates strong momentum. If this trajectory holds, it's plausible that all cars could be electric within the next decade.