Without 'new product,' Tesla competitors will take market share

Shares of Tesla (TSLA) are rising after reporting better-than-expected EV sales for its second quarter and receiving several price target increases from Wall Street analysts. Stephanie Valdez Streaty, Cox Automotive director of industry insights, joins Catalysts to give insight into what can drive the growth of EV sales.

Valdez Streaty points one hill that the EV market must climb to increase sales: "As you can imagine, affordability is always the top barrier. If you think about more options for consumers, if we can have more affordable EVs, that's going to be a game changer. Right now, the average transaction price for an EV is close to 50,000, 54,000, and so that's price premium over an internal combustion engine. And so I think if we can start to get more of these affordable EVs, that's really going to help. One of the things I wanted to mention for providing more affordable is used EVs as we start to see more of those enter the marketplace."

For more expert insight and the latest market action, click here to watch this full episode of Catalysts.

This post was written by Nicholas Jacobino

Video transcript

Now coming up, the latest auto sales reports from Tesla and General Motors showing the demand for electric vehicles might be back on the rise.

Tesla's deliveries came in better than Wall Street anticipated.

General Motors also seeing its easy deliveries increased by 40% compared to a year earlier.

Let's discuss it with Stephanie Valdez three.

She's the director of Industry insight at Cox Automotive.

Stephanie, thanks so much for being here.

I wanna start on Tesla because there's been this question as you know, for many years about whether or not this is a stock that is gonna move off of a story that the CEO tells or the business fundamentals.

We're seeing it move off of these fundamentals.

Is that indicative of a new era for Tesla?

Yeah, I think Tesla is navigating the waves, right?

They're between these growth waves and I think in terms of for automotive sales, right?

They haven't had any new products except for the Cyber track, which is pretty low volume.

And if we're looking at this Q two, as you reported globally in the US, we're probably anticipating a 15% decline in sales.

They're still a dominant player and as you know, they're really positioning on A I robotics, they're going to have their unveiling of the robotic Robo Taxi in August.

So it will be interesting to see how Wall Street reacts to that.

And I'm interested too in the fact that you even bring up the A I and robotics piece for a name like Tesla.

There have been some folks who come on our show and said they want Tesla to really just dive deeper into owning that.

They are a car company and others saying no, they need to hold on to the A I of it all.

Which do you think is a more successful route for the company?

Well, I think right now they need to focus on both, right?

Because the A I robotics, it's, there's a lot of challenges with it with whether it's uh you know, like safety concerns regulations and there's still a dominant player in the EV marketplace.

They just need to have some more product, right?

And they had talked about having an affordable EV roll out um I think next year, but I'm not sure the timeline on that and that's going to be key for them to keep focusing on their product.

Um But I think they're definitely prioritizing A I and robotics as well.

Yeah, you mentioned some more affordable evs to come down the road.

What do you think that could do for the consumer uptake and adoption of evs?

Yeah, I think that's huge.

You know, we've been doing an ev path to adoption study for many years.

And as you can imagine, affordability is always the top barrier.

And so I think if you think about more options for consumers, if we can have more affordable es that's going to be a game changer right now.

The average transaction price for an EV is close to 50,054 1000.

And so that's still, you know, that price premium over an internal combustion engine.

And so I think if we can start to get more of these affordable evs, that's really gonna help.

Um One of the things I wanted to mention for, you know, providing more affordable is used evs as we start to see more of those enter the marketplace, I think that's going to give consumers some more options at different price points and, and that brings up the point about competition.

I'm curious in 10 years.

Do you think that the EV space is gonna be crowded to a degree that Tesla just feels like maybe a drop in the bucket compared to sort of the market leader in the space?

Yeah, I think that's the challenge with Tesla, right?

They've been the dominant player, they still have the market share, right?

Um Potentially could go below 50% this quarter, but you have all the traditional automakers having a lot of product in the pipeline.

And so I think it's, there's a lot of competition and it's all about what consumers like, they like something new, right?

Some new fun, affordable.

And so unless Tesla can start to get more product, they're gonna start to have other automakers eat into that uh market share.

Yeah, and, and, and you know, uh in, in your notes that you sent over to us that consumer uncertainty about the economy and the election could potentially be a headwind.

And I was so fascinated by that, uh explain to me how the upcoming could impact ev sales.

I think one of the things that consumers are thinking about, you know, right now we have the inflation reduction act, right?

There's incentives for consumers there, 7500, not all vehicles are eligible.

Um but consumers can get that if they lease a vehicle.

So I think there's some uncertainty about, should I buy?

What if, you know, there's a, you know, something with the IRA gets eliminated?

There's not the incentive anymore.

So I think consumers are a little bit.

We kind of like waiting it out to see what I should do depending on the outcome of the election.

So I think that's one of it as well.

All right.

Well, thank you so much for joining us.

We really appreciate it, Stephanie, that was Stephanie Valdez Treaty.

She's the director of Industry Insights at Cox Automotive