In June 2021, Tesla's Model 3 became the first electric car to pass one million global sales. The model was the world's third best-selling plug-in electric vehicle (EV) model in 2022, behind the Model Y and BYD Song Plus. However, Chinese manufacturers are closing the gap between them and the U.S. electric vehicle giant. China boasted the largest electric vehicle fleet in 2022—over four times the size of the U.S. EV stock—and the second best-selling model of 2022. BYD sales also overtook Tesla's for the first time in 2022, selling over 533,400 more vehicles than the U.S. brand that year. BYD had also maintained its position in the ranking during the first half of 2023. Despite Tesla's financial success throughout the pandemic and chip shortage, the brand faces increasingly stiff international competition.
How Tesla Competes in the International Market
At over 67.2 billion U.S. dollars, Tesla's automotive sales made up most of its 2022 revenue. In the second quarter of 2023, deliveries of Model 3 and Model Y vehicles accounted for close to 95.88 percent of Tesla's vehicle deliveries by model, duping the Model S and Model X products, which were initially aimed at customers in the high-end sphere of the market. With the Model 3 and Model Y releases, Tesla is now targeting broader customer segments. Tesla is expected to add the second-generation Roadster and the widely anticipated Cybertruck to its existing model lineup. While the United States continues to be Tesla's most important target market, the company also aims to tap into the Chinese and European markets.In China, the brand ranked second behind BYD Auto in 2021, due in part to the popularity of BYD's plug-in hybrid electric models. Tesla faired better in Europe, with the Model Y and Model 3 ranking as the European best-sellers in the first half of 2023. However, while the brand garners regional success, it still faces competition from regional automakers in Europe's national markets. In France, Tesla ranked fifth among the leading plug-in electric vehicle manufacturers, behind European groups such as Stellantis and the Renault-Nissan-Mitsubishi alliance.
U.S. Competition Faces Challenges Toward Profitability
Since going public in July 2010, Tesla has been on top of the EV trends. Its research and development expenses reflect the brand's commitment to innovation, jumping to 3.08 billion U.S. dollars in 2022 due in part to vehicle production and pre-production in the Berlin and Texas Gigafactories. 2022 was the brand's most successful full financial year to date. The company's market capitalization continued to set records in 2022 after climbing over one trillion U.S. dollars in 2021. On March 31, 2022, Tesla's valuation stood at over 1.1 trillion U.S. dollars. Tesla was also the sixth largest company in the S&P 500 Index as of July 2023. However, the company ended its fourth quarter on a less positive note: Its share price dropped through December 2022, after Tesla's CEO Elon Musk sparked controversy by acquiring Twitter. In March 2023, the company had yet to fully recover, reporting a market capitalization under 700 billion U.S. dollars.Tesla's international success is helping boost EV popularity in the United States. Around 918,500 plug-in electric light vehicles were sold in the U.S. in 2022—51.17 percent more than in 2021. Encouraged by Tesla's global performance, startups such as Rivian, Lucid Motors, and Canoo entered the U.S. electric vehicle market. Though the market is booming, these companies have challenges ahead. Rivian, which started its vehicle deliveries in 2021, recorded a net loss of close to 6.75 billion U.S. dollars in 2022. Lucid Motors—which offered the EV with the longest range— also reported a net loss of approximately 1.3 billion U.S. dollars in 2022.
