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Will Ford’s EV sales impact Tesla’s share price?

Tesla has dominated the electric vehicle (EV) market in the US by a long shot, but the road ahead may be bumpy. Ford is growing its market share and Honda and Toyota are also hoping to eat into Teslas dominance.

- Tesla accounted for 65% of US EV registrations in the first nine months of 2022, but growth is slowing

- Ford is in Teslas rear-view mirror – November battery-electric sales were up 102%

- The Global X Autonomous & Electric Vehicle ETF has modest exposure to many EV players, including a 2.19% weighting in Tesla

Itll come as no surprise that Tesla [TSLA] leads the electric vehicle (EV) race in the US, but there are signs that its market share is in reverse. Nevertheless, Ford [F], Honda [HMC] and Toyota [TM] are making their best effort to compete.

According to data from S&P Global Mobility, 65% of the 525,000 EV registrations in the first nine months of the year were Teslas, down from 71% in the same period last year and 79% in 2020. While Tesla accounted for 86% of the pricier luxury market, its forecast to fall below 20% of overall EV sales by 2025.

Tesla's position is changing as new, more affordable options arrive, offering equal or better technology and production build," stated the S&P Global Mobility report. Models priced under $50,000 are becoming increasingly popular, but its an area where Tesla doesnt yet truly compete”. Until it does, other, more budget-friendly automakers are expected to gain ground.

The Tesla share price is down 48.2% year-to-date and down 12.1% in the past month.

Ford in Teslas rear-view mirror

Ford currently poses the biggest threat to Tesla on US markets. Despite Novembers total car sales slipping 7.8% year-over-year to 146,364 units, its battery-electric sales were up 102.6% on November 2021s numbers, helping it claim second place in the US EV market behind Tesla, which accounted for almost 340,000 EV registrations in the US. At 53,752 EV sales in the same nine-month period, however, Ford still has a way to go.

Ford said its share of the EV market had increased 2 percentage points year-over-year in November to 8.6% and added that buyers of its EVs are switching from EV competitors at an annual growth rate of 60%.

Honda and Toyota are planning on muscling their way into the market over the next few years. Honda is targeting a 2026 US release for its EV being produced in partnership with Sony [SONY]. Back in August, Toyota tripled its planned investment in building a battery plant in North Carolina from $1.3bn to $3.8bn.

Its a Tesla market – for now

While Honda and Toyota will hope to chip away at Teslas market share, it'll likely be at least a few years before this is reflected in the numbers. Production will have to ramp up first.

"Before you feel too badly for Tesla, however, remember that the brand will continue to see unit sales grow, even as share declines … The EV market in 2022 is a Tesla market, and it will continue to be, so long as its competitors are bound by production capacity,” said Stephanie Brinley, associate director of AutoIntelligence at S&P Global Mobility.

Nevertheless, the growth outlook of traditional internal combustion engine automakers that are transitioning to EVs or hybrids is robust. Brinley cited an improving regulatory environment in the US as a reason.

Two Honda plug-in hybrid models are currently eligible for tax credits. However, changes to legislation passed in the Inflation Reduction Act comes with caveats. Toyota models sold after 30 September 2023 will be not eligible. Any Teslas sold after 31 December 2019 arent eligible either.

Funds in focus: Global X Autonomous & Electric Vehicle ETF

Much of Teslas recent share price performance can be put down to CEO Elon MusksTwitter saga. Until this dark cloud passes it will remain an overhang” and will be the gift that keeps on giving for the Tesla bears”, tweeted Wedbush analyst Dan Ives at the end of November.

This hasnt had any material impact on the Global X Autonomous & Electric Vehicle ETF [DRIV], however, which has only allocated 2.19% of its total assets to Tesla, despite it being the ninth largest holding in the fund as of 5 December. Toyota is the fifth largest holding at 2.59% and Honda weighs in at 1.35% of assets under management. The fund is down 25.7% year-to-date, but up 5.4% in the past month.

Toyota is currently the eighth-biggest holding in the iShares Self-Driving ETF [IDRV], with a weighting of 3.73% as of 5 December. Tesla and Honda are weighted 3.36% and 2.26% respectively. The fund is down 28.5% year-to-date, but up 7% in the past month.

 

 

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