Elon Musk's electric carmaker, Tesla, once seemed to be on an unstoppable trajectory. However, in Australia, the company's fortunes are now showing signs of decline. November sales dropped again, contributing to the brand's first annual decline. According to figures supplied by the Electric Vehicle Council, Tesla registered 2,540 sales in November, a 35.5% drop compared to November 2023 and a 20.9% sales slide for the year to date.

Global Market Standing

Globally, Tesla still holds a significant position, just ahead of its chief rival, Chinese automaker BYD. With 18.5% of the market compared to BYD's 17.5%, it remains a force to be reckoned with. But the competition in the electric vehicle sector is evolving rapidly, and Tesla finds itself caught in the upheaval.

Mike Costello, the corporate affairs manager at Cox Automotive, which runs Manheim Auctions and collates car market data, explains that there is now much more competition than before. Tesla is not bringing out a lot of new products, especially at the more affordable end. This has put pressure on the company.

The competition includes EVs from mainstream brands like Ford, Toyota, Subaru, Kia, MG, and Hyundai, as well as a plethora of recently arrived or soon-to-arrive Chinese brands such as BYD, Deepal, Leapmotor, Xpeng, Zeekr, and Geely. Sales of hybrids, led by Toyota, are also surging, providing an alternative that is often more affordable than an EV.

Hybrid Sales Surge

EV sales are still up for the first 11 months of 2024, but only by 3.1% - just 2,514 sales. Of the 82,960 EVs sold so far this year, 42% of them - 34,754 - were Teslas. But some of this growth has come from newcomer BYD, which has sold 13,389 EVs, 2,414 more than last year. Other brands like Kia have also seen an increase in EV sales, with an additional 900-odd units sold this year. BMW is also pushing hard on EVs, with 30% of its Australian sales now fully electric.

Musk Factor and Controversy

Another aspect that cannot be ignored with Tesla is what some term the Musk factor. On social media, one can easily find those who view Musk as an objectionable character. Costello says that Musk's controversial nature is enough to turn some people off the brand.

This has spawned a niche online market in bumper stickers, with phrases like "we bought it before he revealed his dark side" and "make this car less embarrassing again". But it's important to keep the sales numbers in perspective.

Despite the challenges, Tesla's product lineup is still quite small and getting on in age. The company only sells two models: the Model 3 mid-sized sedan and Model Y mid-sized SUV. These two models play in the premium end of the market, priced from about $60,000, but each performs strongly in its respective market segment.

Model 3's Success

The Model 3, for example, was the top-selling medium car last year and is still ahead of the Toyota Camry in 2024. It has single-handedly breathed new life into the mid-sized sedan market that many had abandoned, including models like the Subaru Liberty, Ford Mondeo, and Volkswagen Passat.

Despite a 29.3% drop in sales this year, the Model Y's year-to-date tally of 19,392 is still light years ahead of the nearest $60,000-plus SUV rival, the Lexus NX, which has sold 5,619 units. And among about 50 mid-sized SUVs on the market, the Model Y is the fifth-bestseller, behind only the Toyota RAV4 (53,599), Mitsubishi Outlander (25,622), Mazda CX-5 (21,237), and Kia Sportage (19,997). It has outsold the Hyundai Tucson (17,743), Subaru Forester (12,386), and Nissan X-Trail (15,398) and the combined sales of the Honda CR-V, Volkswagen Tiguan, Skoda Karoq, Chery Tiggo 7, and MG HS.

Hybrid Competition

The increasing popularity of hybrids with many of Tesla's rivals has provided healthy competition to the Model Y. The Model Y is expected to undergo a refresh in 2025, which could help it regain some of its lost ground.