It looks like Elon Musk’s Tesla is not meeting expectations. According to data from research firm Cox Automotive shared exclusively with Reuters, Tesla’s U.S. market share dropped to a near eight-year low in August as buyers chose electric vehicles from a growing stable of rivals over the aging lineup offered by CEO Musk’s company.
“I know they’re positioning themselves as a robotics, AI company. But when you’re a car company, when you don’t have new products, your share will start to decline,” Stephanie Valdez Streaty, Cox’s director of industry insights, said in an interview with Reuters.
Tesla, which once held more than 80% of the U.S. EV market, accounted for 38% of the total EV sales in the United States in August, the first time it has fallen below the 40% mark since October 2017, when it was ramping up production of the Model 3, its first mass market car, according to early data from Cox.
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“These legacy manufacturers are all benefiting from this sense of urgency, and they’re able to have attractive offerings for their vehicles – and it’s working,” Streaty said. “I think we’re going to continue to see this momentum through September.”
Tesla’s aging vehicle lineup has fallen behind rivals such as BYD, Kia and GM, which have rolled out newer, more affordable electric vehicles. Adding to the pressure is growing backlash over Musk’s political activity, which has reportedly alienated parts of Tesla’s customer base, particularly in liberal-leaning regions.
The company is now trying to shift attention to its long-term vision, emphasizing artificial intelligence, autonomous driving and robotics projects such as robotaxis and the Optimus humanoid. While these initiatives show promise, they have yet to deliver meaningful gains, and sales and revenue continue to slide—raising concerns among analysts about Tesla’s short-term competitiveness in its core EV business.
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The decline underscores rising competition as automakers boost EV incentives in a difficult market. Analysts expect U.S. EV sales to climb through September before dipping when federal tax credits expire, a shift that could add further financial strain on Tesla and its peers.
Once the dominant force in electric vehicles, Tesla now faces mounting challenges from legacy automakers offering fresher and cheaper models. Musk’s broader ambitions in AI and robotics may be visionary, but critics warn they risk appearing disconnected from the company’s automotive base. At the same time, political controversies tied to Musk are eroding brand loyalty in key demographics.
For Tesla, the moment marks a critical juncture. Without reinvigorating its product lineup and addressing customer concerns, Musk’s reputation could shift from being the face of the EV revolution to a cautionary tale of losing focus amid expanding ambitions.