Tesla's EV market share falls below 40% for the first time in the US

Rivian, BYD, and others are eating into Tesla's market

by · TechSpot

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What just happened? Tesla is not having a good time right now. Sales have been struggling for a while, and the company's US EV market share has dropped to a near eight-year low of under 40%. The primary reason is that there are a huge number of alternative electric vehicles available today, most of which are newer than Tesla's aging lineup.

According to research firm Cox Automotive, which shared its latest EV sales data with Reuters, Tesla vehicles made up 38% of total US EV sales in August.

Tesla's US EV share hasn't fallen below the 40% mark since October 2017, back when it was ramping up the production of its first mass market car, the Model 3.

The data also reveals that Tesla's US EV market share fell from 48.7% in June to 42% in July, its sharpest drop since March 2021, around the time when Ford released the Mustang Mach-E EV.

Tesla sales have been struggling in recent times. The company delivered around 1.79 million vehicles in 2024, down from about 1.81 million in 2023, marking its first annual drop since 2011. Production dipped even more sharply, falling nearly 4% in 2024 compared to 2023.

Tesla is on track for a second year of sales decline. It delivered 384,122 vehicles in the second quarter of 2025, marking a 13.5% drop compared to the 443,956 units a year ago. The Cybertruck is having an especially tough time.

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There's no doubt that CEO Elon Musk's previously close relationship with Donald Trump and his tenure as head of cost-cutting agency DOGE harmed Tesla sales among many people, particularly in Europe.

But much of the problem comes from EV rival companies pushing out newer and cheaper alternatives. Rivian and other US automakers are competing with Tesla domestically, while Chinese companies such as BYD are making huge strides in Europe and their home market – Tesla sales in China fell 9.9% year-over-year in August, and year-to-date sales in the country are down about 7% compared to 2024.

In addition to its core EV business, Tesla focuses on areas such as robotics and robotaxi while most rivals don't have such distractions. The refreshed Model Y, meanwhile, has not been a huge success.

Even though its market share fell in July, Tesla sales were up month-on-month 7% to 53,816. But overall sales of new EVs were up more than 24% MoM as buyers looked to take advantage before the $7,500 tax credit ends. Rival EV makers saw their sales increase between 60% and 120%.

Tesla's shares are up slightly today, though that's related to the potential $1 trillion compensation plan for Musk designed to keep his "focus and attention" on the company. The package is set for a shareholder vote on November 6.