For years, electric automaker Tesla (TSLA) benefitted from its reputation of producing some of the best electric vehicles on the market during a time when such technology was in its infancy.
However, times have changed, technology has evolved, and in a short period of time, Tesla is not the only game in town when it comes to EVs.
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Today, competition from well-established automakers like Mercedes-Benz, BMW, Audi, Chevrolet, and Ford is reducing Tesla's once-competitive edge at a time when Elon Musk's mind is elsewhere.
Tesla's problem with competition
According to a new report from J.D. Power, the new technologies and eye-catching features provided by the wide array of EVs on the market are luring buyers away from Tesla.
In its annual owner-satisfaction study, J.D. Power found that owners of EVs built by the big, established automakers were more "emotionally satisfied" than Tesla owners. Additionally, while Teslas benefits from loyal, repeat purchases, buyers who are new to the EV market gravitate more toward non-Tesla EVs.
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The findings by J.D. Power spell trouble for the Elon Musk-led EV automaker, as they provide a backstory for why its grip on the electric market is at its loosest.
According to data by Cox Automotive, Tesla's share of electric car sales has dropped to a new low. In the second quarter of 2024, Tesla's market share dropped to a dizzying 49.7%, marking the first time its share dropped below 50% in a quarter.
In the same period in 2023, Tesla's market share was 55%, a dismal result compared to nearly 80% in 2020.
All of the EV, none of Elon's baggage
Tesla may have a line up of well-known products that serve a niche crowd carved out amongst the rest of the EV landscape, but the fact of the matter is that most electric vehicle buyers want none of the baggage associated with the Tesla badge.
Already, Tesla is suffering from an image problem. Data from an April 2024 study conducted by market intelligence firm Caliber, showed that many potential Tesla buyers said that they were turned off from the brand because of the highly polarizing online persona of CEO Elon Musk.
They found that over 83% of Americans connect Musk with Tesla. As a result, Caliber gave the automaker a consideration score of just 31%, meaning that most EV buyers have an unfavorable view of the Tesla brand.
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Musk has publicly endorsed Republican Presidential nominee Donald Trump, but his political leanings were no secret to the millions of users on his social media platform X (formerly known as Twitter) long before then.
A recent poll conducted by the New York Times found that many EV owners connect Tesla with Musk and vice versa and that the racist, xenophobic, transphobic, and homophobic views that he shares online have influenced their decision to buy EVs from other brands.
Better EVs from trusted brands
Though these conditions do influence some buyers' decisions, according to J.D. Power's senior director of auto benchmarking, Frank Hanley, traditional automakers have stepped up their game and created EVs that feel better to own than Teslas.
"[Automakers are] launching enhanced vehicles that are more in line with what customers want, including improved interior storage and higher quality materials, as well as ensuring features have ease of use," Hanley said.
"For BEVs, recent launches from traditional manufacturers have surpassed perennial leader Tesla when it comes to owners’ level of emotional attachment and excitement with their new vehicle."
Tesla Inc., which trades on the NASDAQ as TSLA, is down 5.09% since the opening bell at last check, trading at $220.25 at the time of writing.
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