Is Tesla’s Decline Good or Bad for the EV Revolution? – CleanTechnica

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Tesla’s sales dropped in 2024 year over year. You don’t have to be a genius to know that isn’t close to what Tesla’s plans were for 2024 just a few years ago, or even in 2023. It was a significant failure to reach the company’s growth targets. It also came at a time when the broader EV market grew significantly. A question that popped into my mind a couple weeks ago is: is this good or bad for the EV revolution?

First of all, let’s get a few unknowns out of the way:

• We don’t know if Tesla sales will shoot up again in 2025 and onward, or if 2024 was the beginning of a trend in declining Tesla sales. Sales could grow fast again in coming years, could stagnate around the 2024 level, or could decline significantly.
• We don’t know if robotaxi-level Full Self Driving will finally be achieved in 2025, or in 2026, or ever. Whether Tesla achieves this breakthrough is critical to Tesla’s future.
• We don’t know what’s going to happen with the broader EV market in 2025, and with EV policies around the world.

I think it’s important to be open minded and honest about what is happening in the market. When Tesla sales were rising fast and it was clear there was an enormous amount of pent up demand for Tesla vehicles, many in the industry didn’t want to believe it and tried to find all kinds of reasons why it wasn’t true or why Tesla wouldn’t grow from 100,000 sales (or even 100 sales) to 500,000 sales a year. Quality issues, panel gaps, lack of certain buttons, production challenges — there were all sorts of criticisms and explanations for why Tesla couldn’t grow.

Similarly, in late 2023 and throughout 2024, I saw all kinds of rationalizations for why Tesla really did have so much untapped demand and would grow enormously again. I saw numerous signs of demand challenges, and many fans didn’t want to hear that and resorted to hate. Sales dropped year over year and the unprecedented mythical Cybertruck reservation backlog got wiped out, but it still feels like people aren’t recognizing what happened or the risk ahead. The 2024 Tesla sales drop would have been considered Tesla blasphemy a few years ago, it totally disrupts the long-term Tesla story of massive ongoing growth to 10–20 million vehicle sales a year. With growing competition, though, it could get much worse — Tesla sales could decline significantly.

Forecasting is hard, but here’s a long video of a longtime Tesla insider and follower discussing the 2025 forecast with me. However, beyond that, if we assume stagnation, minor growth, or possible decline, what does that mean for the rest of the market and for the EV revolution?

For some reason, this feels like the kind of thing to answer using a bullet-point list. Perhaps because it’s more of a brainstorming about potential effects. Here’s my list of thoughts on this:

• This could really be the big opening other automakers (Hyundai, Kia, Ford, Chevrolet, Volvo, Volkswagen, etc.) need in order to sell more electric cars, ramp up production while bringing costs down, get more profitable with EVs, and receive the affirmation boost to keep going and even step on the accelerator pedal. Perhaps seeing their EV sales and market share rise, while seeing Tesla struggle, is going to help the C suite to get more bullish and more bold.
• Alternatively, this could take the pressure off of those legacy automakers and tell them they can decelerate on EVs. They can even use Tesla’s declining sales as an excuse, saying that customers are turning away from EVs (even if that’s not broadly true). I think if this happened 5 years ago, automakers would have taken advantage in this way. Today … I’m not so sure about that. The market is off to the races, and even if the lead horse slows down, the race is still on.
• Chinese EV producers could really take advantage of the opportunity. With Tesla’s lack of new models, Tesla’s lack of innovation, and consumers always wanting the hot new thing, Chinese EV producers could increasingly enter new markets and grow market share across the world — as they’re doing. Whether global leader BYD, younger startups like XPENG and NIO, or portions of automotive giant Geely like Zeekr and Volvo Cars, there are a lot of avenues for EV sales growth, and with their top competitor declining, they have an opportunity to become the next Toyota, the next Volkswagen Group, and even the “next Tesla.”
• In fact, even in the US, there’s more of an opening for other companies, like Rivian and Lucid.
• Battery prices have come down so much, and electric cars have gotten so much more competitive, that there’s no putting the genie back in the bottle. EV tech is going to continue to improve and come down in price, and EVs are going to continue to take more and more market share away from fossil fueled cars. Tesla or no Tesla, these trends are here to stay and will grow. EVs are the future.

Yes, when a market leader is doing worse, innovating slower, and getting stale, that doesn’t help the market in multiple ways. However, when competitors get better, have an opening to succeed, and diversify, that is great for the market. One could even just say that Tesla’s lackluster 2024 was much less about Tesla than it was about the competition. The electric car market is so much better than it was a few years ago, with so many more really attractive offerings, numerous value-for-money models growing the market (and taking sales from Tesla), a satisfactory average driving range on a full charge, faster and faster charging at more and more charging stations. Tesla’s decline may be a result of the EV revolution heating up, rather than something to worry about.

Five years ago, if someone asked me what electric car I could recommend, I’d have very few options to choose from — Tesla would dominate the conversation. Today, there are dozens upon dozens of models to mention or discussion. Tesla isn’t the only game in town anymore, and it’s not going to be everyone’s taste, and now more people with more diverse taste can enjoy being a part of the EV revolution.