Why This Tesla Analyst Is Projecting Sharp Drop In Market Share, Benefits For Legacy Automakers

Tesla, Inc. TSLA, which has a commanding position in the U.S. electric vehicle market, could see an erosion in market share in the medium term, according to a BofA Securities analyst. 

2022 A Major Year Of EV Commercialization? The year 2022 marks the start of the commercialization of EVs given the launch/ramp of new products by EV startups as well by the incumbents, John Murphy said in a note.

Key EV launches/ramps in the upcoming year include Ford Motor Company's F F-150 Lightning pickup truck, General Motors' GM Silverado pickup truck and Bright Drop EV600 van, Rivian Automotive, Inc.'s RIVN R1T pickup truck, R1S SUV and EDV van and Lucid Group, Inc.'s LCID Air sedan, the analyst said. 

Related Link: How Tesla Performed Against The Competition In China In 2021

Vehicle Launches To Boost EV Market Penetration? Accelerating product launches, Murphy said, suggest higher EV penetration over time.

The sum total of BofA's projected U.S. EV volumes by model work out to potentially 1 million EVs sold in 2022, 1.8 million in 2023 and about 3 million in 2024, the analyst said. This suggests EV penetration of about 6% in 2022, 11% in 2023 and 16% in 2024, he said. 

The analyst sees the price point of EVs to be a limiting factor for EV demand over the coming years. 

Volatile Market Share Likely: The onslaught of new EV models over the next few years will lead to shrinkage of Tesla's U.S. EV market share from 69% in 2021 to 19% by 2024, Murphy said.

The share of incumbent OEMs versus entrants, including Tesla, is likely to shift from 31%-69% currently to 63%-37% by 2024, the analyst said. Among the incumbent OEMs in the U.S. market, based on their product launch efforts, Ford and GM appear to be the biggest share gainers, he said. 

The analyst sees the market share of Ford and GM increasing from mid-single digit to mid-double share through 2024.