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Tesla has been swamped by dozens of new electric vehicles from incumbent rivals looking to poach away Elon Musk’s loyal customers, but one look at their actual sales figures shows that many are suffering a slow, protracted death in America’s fledgling EV market.
As the reality of their dismal sales volumes dawns on them, more carmakers are reconsidering their options amid a glut of models that all eke out an fringe existence in a country dominated by industry leader Tesla. Musk’s company controls a whopping 60% share compared to the 6% of its closest rival brand, GM-owned Chevrolet.
In one example, premium rival BMW already stopped production of its i3 after the model appealed to only a niche following. Mercedes-Benz meanwhile was too ashamed of its first real EV effort from 2019, the EQC, to even bother putting it up for sale in the U.S.
The latest to fold under pressure is Mazda, which is ditching its woeful MX-30 after the 2023 model year in favor of plug-in hybrid electric vehicles (PHEVs) that can run either on gasoline or electricity.
“Our current U.S. electrification efforts are focused on large platform PHEVs, such as the first-ever 2024 CX-90 PHEV and upcoming CX-70 PHEV, as well as introducing CX-50 Hybrid into our lineup to address the specific needs of the U.S. market,“ it said in a statement on Friday.
The problem in many cases is that the cars like the MX-30 were often only given the developmental greenlight years ago to serve as so-called “compliance cars”.
Their primary goal was to sell just enough units to help the manufacturer reach its new car fleet’s tailpipe emission target without cannibalizing sales of profitable combustion engine cars. This bait and switch went so far that the late former Fiat Chrysler boss Sergio Marchionne famously urged U.S. consumers not to buy his Fiat 500e.
Mazda’s first attempt at an EV ‘never stood a chance’
Like the 500e, the MX-30 was offered exclusively in California, the only market in the United States where state regulators have for years imposed mandatory EV targets.
The latest figures from U.S. car market researcher Cox Automotive showed 44 different electric nameplates—three more if you count EVs that use a hydrogen fuel cell instead of a battery—competing for an overall second quarter volume of fewer than 295,000 light duty vehicles. A full 29 of those don’t even register as anything but a blip, failing to breach the low threshold of just 1% of the market. Meanwhile over one out of three EV buyers in the U.S. drive off with Tesla Model Y.
The problem therefor is not a lack of variety of models, but the difficult economics in terms of performance per dollar charged to the customer.
The homely BMW i3 for example used lightweight but expensive carbon fiber to extend how far it can drive on one charge. First conceived in 2010, its early focus on using the maximum possible amount of sustainably produced and recycled materials flopped with EV buyers more interested in the sleek design of the Model S and its straight-line acceleration from a standstill.
By comparison, the Mazda MX-30 simply got everything wrong, costing more than $35,000 before options and equipped with a pitiful EPA-certified range of 100 miles. Total sales over the past 18 months across came in at just 390 units.
“Mazda’s first production EV never stood a chance in this market,“ concluded Road & Track.
Even those that make concerted efforts to develop a truly competitive Tesla-fighter struggle. The brand new Mercedes-Benz EQS, its first luxury EV entry to the U.S. market with an EPA range of 350 miles, is only selling in roughly the same numbers as the Model S, a sedan that has barely changed in appearance since its debut over a decade ago.
Only China’s BYD poses a threat to Tesla right now
Musk gambled that the competition is spreading itself too thin with so many different types, each nibbling away a tiny share of the market. Once-hyped Tesla competitors like the Jaguar i-Pace, named by a broad jury of motoring journalists as Europe’s car of the year in 2019, sold just 80 cars in the U.S. during the second quarter of 2023.
Instead the Tesla CEO decided the Model Y would be so competitive at scale that he could flood the market with them at prices so comparably low every other major incumbent would struggle to match them.
So far that gamble is paying off. Ford last month ratcheted up its forecast full-year loss at its EV business to $4.5 billion from a previous $3 billion, while Musk notched another record quarter of deliveries and still managed to earn a near 10% operating margin.
Even if the vehicle loses its freshness now that it is on track to be the world’s best-selling car of any kind, customers are still opting for a Model Y because it still fits their budgets and their needs better than almost any rival. (Although his recent spur-of-the-moment offer to grant customers a one-time amnesty to keep their self-driving software when trading in for a new Tesla shows his string of fresh records may run out of road by Q4.)
Currently the only serious competitors to Tesla come from China, led by Warren Buffett-backed BYD, thanks to Beijing’s forward-thinking industrial policy.
Even Volkswagen has now taken the unusual move of investing in entrepreneur He Xiaopeng’s U.S.-listed Chinese car company, Xpeng. Late last month VW said it would invest $700 million to acquire a 5% stake in the EV manufacturer—a rival best known for being a copy-paste of Musk’s carmaker.
