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Tesla’s Market Domination Is Waning

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Good morning! It’s Wednesday, July 10, 2024, and this is The Morning Shift, your daily roundup of the top automotive headlines from around the world, in one place. Here are the important stories you need to know.

1st Gear: Tesla’s EV Market Share Falls Below 50 Percent

Tesla’s electric vehicle market share has slipped once again in the U.S., and it now sits at just a tick below 50 percent for the second quarter. Don’t get me wrong, a single company owning nearly half of all EV sales in the U.S. is still incredibly strong, but it’s certainly not where it once was.

Tesla made up 49.7 percent of all electric vehicle sales for the quarter that ran from April to June. That’s down from 59.3 percent from the same time a year earlier. The Austin, Texas-based EV maker lost ground to electric cars from General Motors, Ford, Hyundai and Kia, according to Cox Automotive. This is the first time Tesla’s market share has been below 50 percent. From the New York Times:

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Overall, U.S. electric vehicle sales climbed 11.3 percent from a year earlier, suggesting that consumer demand for the technology remains healthy even if sales are no longer growing at more than 40 percent a year as they were last year. Americans bought or leased more than 330,000 electric cars and light trucks during the quarter, accounting for 8 percent of all new cars sold or leased in the three-month period. A year earlier, electric vehicles accounted for 7.2 percent of the market, Cox said.

Here’s how Tesla lost its edge:

The numbers are the latest sign that Tesla is losing its dominance in a market it in effect created in 2012 when it introduced the Model S sedan. Before that car, very few electric vehicles were sold in the United States.

[...]

A few years ago Tesla didn’t have many competitors, and pretty much no other company could match its cars’ driving range on a full charge or acceleration. But established carmakers have been introducing electric vehicles that can travel 300 miles or more, equaling and sometimes exceeding the capabilities of Tesla’s cars.

There are well over 100 electric models available in the United States, according to a separate report published Tuesday by the Alliance for Automotive Innovation, an industry group. Prices have fallen as the supply and variety of models have increased, making it possible for more people to afford one.

Intense competition “is leading to continued price pressure, helping push E.V. adoption slowly higher,” Stephanie Valdez Streaty, director of industry insights at Cox, said in a statement.

Many consumers are now buying electric cars from established carmakers like BMW or Ford, which have large dealer networks that can provide maintenance and repairs. Tesla sells cars online and many consumers have said that it can be hard to get their cars repaired at the company’s relatively small network of service centers.

Tesla sales have also suffered from an aging lineup. Its best-selling vehicle, the Model Y, went on sale in 2020, making it dated by industry standards. Hyundai and its sister company, Kia, offer more electric models than Tesla, with competitive prices and newer designs.

Last week, Tesla said its global sales fell 4.8 percent, to around 444,000 vehicles in the second quarter. It doesn’t break out its sales by country, but Cox estimates Tesla’s U.S. sales fell about 6.3 percent in the second quarter to 164,000 vehicles.

Tesla CEO Elon Musk’s bizarre shift to the political right wing isn’t helping matters either.

Electric vehicle owners tend to be liberal or left-leaning and electric vehicle sales are highest in states that generally elect Democrats for statewide and federal offices.

In some good news for Tesla, a few automakers like Mercedes-Benz, Polestar, Porsche and Volvo actually lost ground in the second quarter as compared to a year ago.

Still, no matter how you slice this news, it’s becoming more and more apparent that people would rather get other EVs than deal with the baggage owning a Tesla brings with it.

2nd Gear: Volkswagen Is Having A Tough Time

The possible closure of an Audi plant and a 3.8 percent drop in second-quarter sales (driven mostly by China) have put Volkswagen in a bit of a tough spot right now. From Reuters:

Deliveries in China were down by nearly 20% amid a wider decline in sales of combustion engine cars which still make up the majority of Volkswagen’s line-up in the country.

As China heads speedily to an all-electric market, Volkswagen has said it will be raising its battery-powered offerings in coming years and prioritising profitability even as rival local carmakers slash prices up by to 50%.

“We do not expect an easy year,” a spokesperson told reporters.

The company lowered its 2024 operating return on sales forecast to 6.5-7% from 7-7.5% and said the Audi brand was considering closing its Brussels site, which employs about 3,000 people, due to low demand for its higher-end electric cars.[...]Finding an alternative use for the plant or closing it, as well as other expenses, would cost up to 2.6 billion euros ($2.8 billion) this financial year, Volkswagen announced.

The future of Audi’s plant in Brussels was thrown into question earlier this year after the German automaker said the electric vehicles that would come after the Q8 E-tron would be built in Mexico.

Rising orders for newer models such as the Q6 e-tron coming to market this year had led to a sharp drop in interest in the older Q8 e-tron produced in Brussels, Audi said on Tuesday.

Audi has struggled to catch up with premium carmaker competitors BMW and Mercedes in the transition to electric vehicles.

“Products like the first generation Q8 e-tron were halfway solutions - not the full clean sheet like Audi has done with its new premium electric platform,” said Stephen Reitman of Bernstein Research. “The potential of the Q6 is higher.”

Audi has promised a refresh in 2024 and 2025 with over 20 new EV and combustion engine models, followed by EV-only models from 2026.

If this plant closes, it would be the first VW plant to be shuttered in 40 years.

3rd Gear: Takata Airbag Recall Hits 390,000 BMWs

BMW is recalling 390,000 vehicles in the U.S. as part of the massive Takata airbag recall. The faulty airbag inflator could potentially explode, according to the National Highway Traffic Safety Administration. From Reuters:

An explosion of the inflator could cause sharp metal fragments to strike the driver or other car occupants, potentially leading to injury or death, the U.S. auto safety regulator said.

The faulty airbag inflators, PSDI-5, manufactured by Japanese automotive parts company Takata Corp, have become part of the largest, most complex recall process in auto history.

Over 30 deaths, including at least 26 in the U.S., and hundreds of injuries have been attributed to the Takata airbag issue since 2009. In the past 10 years, over 100 million vehicles fitted with the faulty part have been recalled worldwide.

The latest BMW recall includes certain BMW 3 Series Sedans and Sportswagon models manufactured between 2006 to 2012.

These vehicles may have a steering wheel with a PSDI-5 inflator installed by owners, even though it was not officially approved by BMW as a replacement part.

The PSDI-5 inflator has been found to be susceptible to rupture after several years of exposure to persistent high temperatures and humidity, investigations by Takata and independent laboratories have found, said the NHTSA.

At one point, Takata was the world’s largest airbag supplier. It filed for bankruptcy back in 2017 following news breaking about the scandal.

4th Gear: Stellantis Recalls 332,000 Cars Over Seat Belt Issue

332,000 Alfa Romeos, Jeeps and Fiats are being recalled by Stellantis in the U.S. because of an issue with the seat belt sensor, according to the National Highway Traffic Safety Administration. From Reuters:

“A seat belt buckle switch sensor may be improperly connected, preventing the front seat air bag from deploying as intended,” the U.S. auto safety regulator said.

Buckle sensors are used to detect if the seatbelt is properly engaged.

[...]

The recall includes certain 2017-2024 Alfa Romeo Giulia, and 2018-2025 Alfa Romeo Stelvio, along with 2019-2023 Fiat 500X, Jeep Renegade, and 2024 Fiat 500E models.

It’s not really ideal if your airbags don’t go off in a crash that warrants them, is it?

NHTSA says dealers will make the repairs for free. How kind!

Reverse: Thank You, Swedes

https://www.history.com/this-day-in-history/u-s-patent-issued-for-three-point-seatbelt

Neutral: Surprisingly Capable, The Acadia AT4

On The Radio: Haim - “Little of Your Love”

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