Famous Analyst Predicted Tesla EV Market Share In 2025 Will Crash To 11% From 70% – Will He Be Right?

Back in 2022, Bank of America analyst John Murphy made headlines when he predicted in his annual Car Wars forecast that Tesla's market share in the EV industry would fall from 70% to just 11% in 2025. 

Competition was the key reason Murphy cited at that time. The analyst said Elon Musk had been operating in a "vacuum" for about a decade without competition and that advantage was ending.

"That vacuum is now being filled in a massive way in the next four years by very good product, not by econobox, toaster-box EVs, but real good product."

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Tesla's Market Share Declining

When John Murphy made his famous prediction, Tesla's market share was 70%. That figure fell to less than 50% in the U.S. in just about two years. Earlier this year, Cox Automotive’s report showed Tesla's market share fell below 50% for the first time, coming in at 49.7% as of the second quarter. The market share further ticked lower to 48.2% in the quarter ended October 31. 

Clearly, Tesla's EV market share is declining. Will this downtrend continue through 2025 and reach 11%? 

Donald Trump's Policy on Tax Credits and Its Impact on Tesla's Market Share

Analysts in the EV industry believe the President-elect's reported plans to end the $7,500 consumer tax credits on EV purchases would directly impact Tesla. Elon Musk supports Trump's plan to end these credits, but he has fought for these benefits in the past. Tesla was able to cut the prices of its EV models drastically because of these credits. Last year, after the Biden administration issued new guidelines on EV tax credits, Tesla slashed $5,000 off the Model S and Model X and decreased the price of its Model 3 sedan by $1,000 and the Model Y by $2,000.

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During this year’s third-quarter earnings call, Musk hinted that his Cybercab price was under $30,000 after including the impact of the EV tax credits.

"Yeah. It will be like with incentive. So, 30K, which is kind of a key threshold," Musk said while answering a question.

Musk has long envisioned developing mass-market EVs that American families could easily afford. Without the tax credits, his company would find it difficult to make budget EVs, further denting Tesla's already declining market share.

Tesla's Troubles in the U.S.: Cheaper Alternatives Keep On Coming

An overall slowdown in EV demand and intense competition from several companies in the U.S. is denting Tesla's market share. For example, in California, Tesla's EV market share is down about 12.6% so far this year. Hyundai, on the other hand, has seen its market share rise by over 3.6% in the same period. The company's new three-row electric SUV Ioniq 9 is making headlines these days.

 In June, Bloomberg reported that General Motors' Chevy Equinox base model price would be around $28,000 and the company planned to launch the Chevy Bolt with an even cheaper price tag by 2025.

In the 2024 list of the most affordable EVs, Tesla ranks fifth, outranked by Volkswagen, Nissan and Hyundai, among others. 

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Elon Musk's Political Activism and Its Impact on Tesla's Market Share

Elon Musk's increased political activism also impacts the company's sales. Earlier this year, a detailed survey conducted by market intelligence firm Caliber showed Tesla's consideration score – a metric that shows the likelihood consumers would buy or continue buying a brand’s products or services if given the chance – fell to 31% from its 70% high in November 2021. 

According to Reuters, Caliber said Tesla's reputation was directly linked to Elon Musk, with a survey showing that 83% of Americans connected Musk with Tesla.

Tesla's Declining Market Share in Europe

Tesla's market share in Europe is also slipping amid intense competition. In July this year, for the first time, BMW surpassed Tesla in the European electric car market. The company delivered 14,869 new EVs in Europe during the month, about 308 units ahead of Tesla. Chinese automakers are just getting started in Europe. Reuters conducted several interviews with auto executives earlier this year. They found that major Chinese EV companies like Byd, Chery and Great Wall Motor plan to launch 20 EVs in Europe over the next five years. 

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Tesla's Market Share Under Threat in China

Tesla's troubles in China are well-known now. The company is up against many companies making budget EVs, including BYD, Xpeng, Geely Automotive and IM Motors, among others. Tesla's market share in October fell 5.3% year over year and a whopping 23% from September. On the other hand, BYD, Xpeng and Geely posted record sales in the same month.

Tesla's Future in 2025

While Tesla's market share might not drop as steeply to 11% in 2025 as BofA's John Murphy predicted, the company is already seeing its slice of the pie eroding. The coming months and years will tell whether Elon Musk could turn the tables using his "Trump card," robotaxis or a surprisingly good (and cheap) EV.

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