Is the electric vehicle race over before it’s truly begun?

By Jeff Gibbs

Is the electric vehicle race over before it’s truly begun? That certainly looks to be the case if you dive into the sales data for the first six months of 2023, with Tesla so far ahead of the competition it’s hard to see the catching up anytime in the near future.

Tesla has sold 25,577 cars in the first half of 2023, which accounts for 76.5 per cent of the entire electric vehicle market. The closest challenger is China’s BYD with its Atto 3 selling 6196 examples in the first six months of the year.

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In contrast, the ‘big three’ German luxury brands – Audi, BMW and Mercedes-Benz – have managed to sell a total of 2030 EVs in the first half of the year, despite offering 10 different models across the respective brands.

Which puts Tesla in the box seat as the automotive world begins to move to an electric future. Any car maker will tell you it’s easier to keep a customer within your brand than it is to attract them in the first place. Which means, as Tesla’s sales continue to grow and it attracts more and more customers, it puts itself in a better position to sustain this success into the future.

Assuming the American brand can provide a positive experience to its owners, there’s less reason for them to look outside the brand and stick with Tesla as long as they can continue to provide a suitable model to move into.

It’s the same principle that allowed the likes of Toyota, Hyundai and Kia to grow over the last few decades.

The Hyundai Excel is perhaps the best example of this idea, with the small car once a popular and affordable choice for buyers looking for their first new car. Hyundai was able to give enough of those buyers a positive ownership experience that many have likely stuck with the brand over the years and allowed it to grow and become more premium.

The Tesla Model Y has the potential to have a similar impact on the luxury market. It will be the first EV for most of their customers and if it’s relatively trouble-free then those buyers will be less likely to try another brand, even if it’s Mercedes-Benz or BMW.

Tesla Model Y Electric Vehicle.

You could argue it’s already happening, with Mercedes offering a strong line-up of EVs, with the EQA, EQB, EQC, EQE and EQS already available in Australia as alternatives to Tesla’s offerings, but those five models have only managed 1114 total sales this year.

Audi is in an even trickier position, with its electric options limited to the high-end Q8 e-tron and e-tron GT, resulting in just 273 sales. The four-ring brand’s local management has made it clear in the past that it sees the Q4 e-tron as its best chance at a volume-selling EV, but so far hasn’t locked in a timeframe for when that car will even go on sale in Australia.

While these more-established brands are confident that their aftersales and ownership experiences with customers will help lure buyers away from Tesla eventually, that is looking like an increasingly risky strategy as sales of the Model 3 and Model Y continue to remain so much stronger than the competition.

Has the Electric Vehicle Race Already Been Decided?

The first half of 2023 has seen Tesla dominate the electric vehicle (EV) market to an extent that raises doubts about its competitors catching up anytime soon. Tesla’s sales figures are nothing short of remarkable, with the American automaker selling an impressive 25,577 EVs, representing a staggering 76.5 percent of the entire electric vehicle market. In comparison, China’s BYD, the closest challenger, managed to sell 6,196 examples of its Atto 3 during the same period.

Even the ‘big three’ German luxury brands – Audi, BMW, and Mercedes-Benz – collectively offered 10 different EV models but only achieved a total of 2,030 sales in the first six months of the year. This glaring difference in sales numbers puts Tesla in the driver’s seat as the automotive world transitions towards an electric future.

One critical factor contributing to Tesla’s dominance is the brand loyalty it has garnered. As any car manufacturer knows, it is much easier to retain existing customers than to attract new ones. Tesla’s growing customer base means that more and more buyers are likely to remain loyal to the brand, provided the company continues to deliver positive ownership experiences.

China’s BYD Electric Vehicle.

This strategy of fostering customer loyalty has been successfully employed by automakers like Toyota, Hyundai, and Kia over the past few decades. A prime example is the Hyundai Excel, which once captivated buyers with its affordability and reliability. Hyundai’s ability to provide a positive ownership experience resulted in many customers sticking with the brand, contributing to its growth and evolution into a more premium automaker.

Similarly, the Tesla Model Y has the potential to revolutionize the luxury market. Being the first EV for most of its customers, if it proves to be trouble-free, these buyers are likely to remain loyal to the brand, even when comparing it to established luxury brands like Mercedes-Benz and BMW.

Despite Mercedes offering a strong line-up of EVs, including the EQA, EQB, EQC, EQE, and EQS, these alternatives to Tesla’s offerings have managed only 1,114 total sales in Australia this year. Audi, too, finds itself in a challenging position with limited electric options like the high-end Q8 e-tron and e-tron GT, resulting in just 273 sales. Although Audi’s management sees the Q4 e-tron as a potential volume-selling EV, they have yet to announce a definite timeline for its release in Australia.

Established brands remain confident in their ability to entice buyers away from Tesla with their aftersales and ownership experiences. However, this strategy is becoming increasingly risky as Tesla’s Model 3 and Model Y sales continue to outperform the competition by a significant margin.

In conclusion, Tesla’s dominance in the EV market during the first half of 2023 has given it a considerable advantage as the automotive industry shifts towards electrification. The brand’s loyal customer base and consistently strong sales indicate that Tesla is well-positioned to sustain its success into the future. As other automakers strive to compete, they must address the challenges posed by Tesla’s brand loyalty and continually evolving electric offerings. Only time will tell if Tesla’s lead can be narrowed or if the race has indeed been decided before it has fully begun.

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