Tesla Inc. (TSLA) is an American electric car and power train designer, developer, manufacturer, and distributor headed by serial entrepreneur Elon Musk. The company was founded in 2003 and is headquartered in Palo Alto, California.
Key Takeaways
- Tesla has several competitors among traditional carmakers, such as Ford and Honda.
- Tesla has managed to see success by focusing on premium electric vehicles (EVs).
- There is more competition, however, now entering the higher-end electric and self-driving car market.
- Still, when it comes to luxury EVs, Tesla owns the top spots.
Tesla Growing Nicely
Tesla is also involved in providing services to other automotive companies toward these goals, for example, by selling its battery technology. Tesla has two primary revenue segments—automotive sales and development services. Automotive sales account for the lion’s share of the revenue.
Tesla has been seeing marked growth of late, after years of breakeven performance. Tesla beat Wall Street’s earnings expectations in the second quarter of 2021, generating $1.1 billion in the second quarter (on a GAAP basis), doubling the $438 million it generated in the first quarter. During the second quarter of 2020, Tesla generated just $100 million in income. Using adjusted figures (non-GAAP), Tesla reported $1.6 billion in income for the second quarter, up from $1.1 billion in the first quarter of 2021 and $451 million in the second quarter of 2020.
On November 15, 2021, President Biden signed into law the Infrastructure Investment and Jobs Act. The bipartisan infrastructure bill authorizes $1.2 trillion in spending, including funding the following initiatives:
- Build out the network of EV charging stations: $7.5 billion
- Spending on roads and bridges: $110 billion
- Broadband investment and internet access: $65 billion
The legislation is good news for Tesla and other U.S. EV manufacturers since it will accelerate the deployment of EV chargers nationwide along highways and within local communities. The legislation is designed to increase EV adoption by expanding the network of EV chargers to 500,000 nationwide.
Top Tesla Competitors
Major competitors for Tesla include traditional auto companies such as Ford Motor Company (F), the multinational automobile manufacturer founded in 1903, and General Motors (GM), the U.S.-based automobile manufacturer founded in 1908. As of November 29, 2021, Tesla had a market cap of $1.1 trillion, compared to Ford’s $78 billion and GM’s $86 billion.
Several other carmakers are now active in the EV space, including Honda, Hyundai, Kia, Mazda, Volkswagen, and Volvo. Traditional car companies are increasing their offerings of hybrid gasoline-electric cars as well as pure electric vehicles—such as the Nissan Leaf. Still, Tesla cars carry with them a certain high-status cache that has not yet been reproduced by the incumbent automakers.
Tesla Atop the EV Market
Tesla has four EVs that own part of the electric vehicle market. They are the only company that has multiple cars on the market, other than Hyundai (which has two). In terms of 2021 second-quarter market share for EVs, here are the top five selling cars and their market share for the quarter:
- Tesla Model Y (32.9% market share)
- Tesla Model 3 (22.6%)
- Chevy Bolt (9.5%)
- Mustang Mach-E (5.4%)
- Tesla Model X (5.2%)
Note that Tesla’s Model S ranked eighth with 3.9% of the market share. All together, Tesla’s four EVs had 64.6% of the market during the second quarter. Granted, there are other high-end EVs on the market, such as the Porsche Taycan, Audi e-tron, BMW i3, and Jaguar I-Pace, but they still command a small fraction of the market. Altogether, those four EVs had 5.7% of the market share in the second quarter.
Future Competition
During its 2021 second-quarter earnings call, Tesla said that it would start production of its Cybertruck (an EV pickup) in 2022. It also plans to start production of its electric semi-tractor truck next year.
In the electric pickup market, Tesla will face increased competition as both Ford and GM are also working on EV trucks. Both announced in 2021 (in May and April, respectively), that they would offer their signature trucks in full EV form.
GM said it will build a Chevrolet Silverado EV with a 400-mile range capacity, but has given no release date. Ford said it will launch its EV truck next year, dubbed the Ford F-150 Lightning, which will have a range of up to 300 miles. Tesla has said it expects 250+ miles of range for its Cybertruck.