Download now: Cannabis Cash

Cheaper EVs are Expediting the Transition to Vehicle Electrification

Written by Jeff Siegel
Posted January 2, 2023

Last week, I took my first drive in a Polestar (NASDAQ: PSNY). 

And boy was it sweet.

polestar

If you’re unfamiliar, Polestar is a Swedish brand that was acquired by Volvo in 2015.  Volvo, by the way, is owned by Chinese automaker Geely.

The vehicle has only been on the roads for about two years, so it’s likely that you haven’t seen one yet.  But given the price (around $40k after federal and state tax credits), and the very impressive ride, Polestar could make some inroads in 2023, pulling a small amount of market share from Tesla (NASDAQ: TSLA).

Of course, Tesla has a lot of new competition nipping at its heels. And while Tesla did own the largest chunk of the EV market this year, it’s going to be difficult for it to keep that up next year.

To be sure, Tesla’s market dominance is not trivial. 

Here’s how Tesla measured up in the U.S. market in the first three quarters of 2022 …

q3evboom

And here’s how Tesla measured up in the U.S. market in Q3 …

q3evboom

The move is subtle, but it’s there.  And with more competitive pricing from the likes of GM (NYSE: GM), Ford (NYSE: F), and Hyundai (OTCBB: HYMTF), these charts will look vastly different by the end of next year.

I’ve driven most of these vehicles, and based solely on those test drives, I think Polestar, Hyundai and Kia are going to surprise a lot of folks.  Because Hyundai and Kia did not build second-rate EVs.  These are solid vehicles, offering smooth rides, competitive battery technologies, and all the bells and whistles most of us now expect with electric cars.  And they’re priced within reach of most car buyers, whereas Tesla does still command a bit of a price premium.  

To clarify, the premium on the Tesla is absolutely worth it.  Of all the electric cars I’ve driven, Tesla still crushes it.  But with more competitively priced EVs entering the marketplace now, it’s not hard to see how Tesla will lose market share.  Not enough to gut the company or anything like that.  But enough to show that Tesla is no longer untouchable in the EV game.

Also worth noting, the Q3 numbers confirm the growth story around EVs.

In Q3, 2022, 6.1% of all U.S. auto sales were electric. 

In Q3, 2020, only 2.2% of all U.S. auto sales were electric.

Check out this short 2-year history of sales percentages …

  • Q3 2022 — 6.1%
  • Q2 2022 — 5.1%
  • Q1 2022 — 4.7%
  • Q4 2021 — 4.1%
  • Q3 2021 — 3.7%
  • Q2 2021 — 3%
  • Q1 2021 — 2.5%
  • Q4 2020 — 2.3%
  • Q3 2020 — 2.2%

Love them or hate them, the transition from internal combustion to vehicle electrification is well underway.  And we will invest accordingly. 

Hydrogen Fuel Cells: The Downfall of Tesla?