Tesla lost market share in the electric vehicle market with the arrival of new electric car manufacturers and former giants of the gasoline-powered car industry such as Volkswagen, GM, Nissan and Ford.
Volkswagen has been the most advanced in its efforts to transform its company to electric vehicle production. Aware that the use of combustion engine vehicles will drop by half by 2040, Volkswagen is investing $43 billion to establish 6 battery factories for electric vehicles across Europe and three in China, the goal: to overtake Tesla in sales in the European market.
Although Tesla still dominates the EV market, during 2021 its share has fallen to the lowest level seen since 2019. Between March and April 2021 Tesla’s electric car sales share fell from 29% to 11%, as a product of new competitors entering the market, both traditional companies and new tech start-ups.
Beyond the efforts it will be difficult to dethrone Tesla as the main supplier of electric vehicles, while Volkswagen is just setting up its own gigafactory to assemble electric vehicles and produce their batteries, Tesla already has six gigafactories operating across the United States, has just finished building its first factory in China and will build one in Germany.
Although Volkswaggen is the company that plans to invest the most in the transition from combustion cars to electric vehicles, companies such as Ford and GM are not far behind, allocating up to $29 billion and $26 billion, respectively, to the production of electric cars.
Tesla lost share not only because of the entry of larger competitors, but also because of smaller start-ups
Start Ups like Lordstown Motors are also gearing up to enter to compete in the electric vehicle market, after making a $700 million capitalization and being acquired in large part by one of the auto industry giants GM.
The electric van company Canoo has also come to light with new models ready to compete in this particular segment. After a capitalization of almost $600 million, the Californian company will count on the participation of Kia and Hyundai in the assembly of its electric vehicles.
Some companies such as Lucid Motors plan to compete in the high-end market, the company when it goes public estimates to raise up to $4.4 billion in its IPO, and plans to launch a luxury sedan. The Saudi Arabian government made a $1.8 billion capitalization in the luxury electric car company.
The entry of more competition for Tesla has caused the electric car giant to lose considerable market capitalization over the past few months. The market has reacted to the entry of new competition for Tesla and its share price has fallen 30% in the last 6 months, falling from a high of $895 in January to $625 in June.
The electric vehicle boom will have to face an additional challenge and that is the global shortage of semiconductors or microchips facing the world. In fact, traditional automakers today are the ones facing production cuts due to semiconductor shortages, which will also bring delays in electric vehicle manufacturing. Tesla, for its part, has made preferential agreements with semiconductor manufacturers that involve substantial payments for advanced.