Why Americans Buy Teslas Over Other Electric Vehicles

Tesla has long had a tight grip on electric vehicle sales, accounting for nearly 80% of electric vehicles sold in 2020.

But the California-based company faces increased competition as automakers and startups spend billions to catch up, focusing on localized production of battery cells to meet demand.

Tesla continues to dominate the small industry, as sales of electric vehicles, including hybrids, are expected to account for less than 4% of all sales in the United States this year, according to industry forecasters.

In October, the Model 3 became the first electric car to become the best-selling vehicle in Europe. Tesla CEO Elon Musk has said the relatively inexpensive Model Y will one day become the best-selling car of all types.

Some automakers were unwilling to invest heavily in electric vehicles, but the industry is changing.

“It’s no surprise that Tesla still dominates sales of electric vehicles, as only those with truly booming viable products,” Michael Fiske, associate director of IHS Markit, told CNBC in October. “In a growing market, it is extremely difficult to maintain a majority market share, regardless of the sector. … As we start to move towards a bigger, really bigger number of manufacturers going to play in space, Tesla has to lose some share.

Most automakers, with the exception of Tesla, were reluctant until recently to invest in the production of battery cells which is the key to the creation of electric vehicles, and they largely outsource the production of these cells from battery to suppliers in Asia. Now, given the issues with the current global supply chain, automakers are starting to focus on local production of battery cells, a CNBC report noted.

Investments in electric vehicles have climbed 41% in the past year. Based on a five-year moving average of the announced investments, companies are expected to invest $ 330 billion through 2021 across the global electric vehicle supply chain, AlixPartners noted in a press release in June.

Due to investments by automakers and startups in manufacturing electric vehicles, Tesla’s market share in all-electric vehicles is expected to drop in 2021 to 56% and to 20% by 2025.

Automakers around the world have started setting timetables to switch to electric vehicles in the face of increasingly stringent emissions standards put in place to fight climate change Photo: AFP / JENS SCHLUETER

The adoption of electric vehicles will be rapid, but it is unlikely to meet President Biden’s target of having half of new vehicles sold in the United States be electric.

General Motors has entered into a strategic sourcing agreement with Wolfspeed for the development of silicon carbide power devices for use in future GM electric vehicle programs, according to Tip Ranks. GM expects to overtake Tesla as the largest seller of electric vehicles in the United States.

Meanwhile, the world market continues to grow. European automakers like Volkswagen and Volvo plan to build electric cars exclusively over the next decade, while Jaguar plans to sell electric cars only from 2025.

“There are a lot of competitors in the electric car market now that Tesla has proven that there is indeed a demand for the product,” Josh Simpson, vice president of operations and investment advisor at Lake Advisory Group, said in US News and World Report.

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