Musk predicted tax-credit loss would hurt first, then help Tesla
Tesla’s share of the U.S. electric-vehicle market climbed to 52% through August, up from 43% a year earlier, as legacy automakers pulled back competing models faster than the company itself, according to Motor Intelligence data published by The Wall Street Journal. The relative recovery returned the Austin, Texas, company to majority control of a market it once dominated with more than 80% of all EVs sold.
Elon Musk had predicted that an end to America’s federal electric-vehicle tax credit would be painful for Tesla at first but ultimately beneficial to the automaker in the long run. Sales data now bear out that forecast. Tesla sold 325,351 vehicles in the United States through August, a 16% decline from a year earlier. The broader U.S. EV market fell 30% over the same period, the Journal reported. Tesla’s U.S. sales peaked at 654,888 in 2023 and are on track to decline for a third consecutive year, according to Cox Automotive data.
Tesla’s market share had eroded to a record low of 41% in 2025, after legacy automakers including Hyundai, Ford, and General Motors introduced their own electric models and Musk’s work with the Trump administration — including downsizing the federal government — sparked protests outside Tesla stores and turned away some buyers. The company had previously held more than 80% of the U.S. EV market.
Musk has de-emphasized Tesla’s core auto business. He canceled the luxury Models S and X without replacements and has focused instead on fully autonomous vehicles and humanoid robots, the Journal reported. Tesla did not respond to a request for comment.
The driver-assistance software known as Full Self-Driving (Supervised) will be Tesla’s main selling point for the foreseeable future, said John Murphy, an independent consultant and former Bank of America autos analyst. While Tesla overhauled its two volume vehicles, Models 3 and Y, in recent years, neither are totally new from the ground up, and the automaker has shown little interest in building out a wider lineup of new cars. “The perceived unique feature of FSD is the significant focal point now in their auto business,” Murphy said. “Refreshing products and running a traditional consumer retail play is completely off the table at this point.”
Jon Ward, a Los Angeles marketing executive, bought a Model Y in April — his third Tesla. While intrigued by Rivian’s new R2 SUV, Ward said he never seriously considered another brand, mainly because of his reliance on Tesla’s automated driver-assistance software, called Full Self-Driving (Supervised). Trading in his 2018 Model 3 meant he and his wife no longer had to fight over FSD, which they had equipped only on their 2023 Tesla. “I use it basically all the time,” Ward said. “It’s almost like, why would I bother driving? This does it so well.”
Cox Automotive analyst Stephanie Valdez Streaty attributed Tesla’s relative recovery to the absence of competitors. “Tesla is shrinking too, but just more slowly,” Streaty said.
Popular alternatives have disappeared. The Honda Prologue, Volkswagen ID.4, and Ford F-150 Lightning have either been discontinued or are slated to end production soon, the Journal reported. The Chevrolet Equinox and Blazer EVs and Ford’s Mustang Mach-E remain on sale but have had production cut significantly.
Affordable EVs once positioned as Tesla challengers have struggled to gain traction. General Motors revived the Chevrolet Bolt earlier this year but curtailed production to a single shift and will phase the vehicle out in 2027 to make way for gasoline-powered models. Nissan introduced a third generation of its Leaf EV but has indefinitely delayed importing the most affordable variant from Japan.
The Model Y SUV now anchors Tesla’s U.S. business. Sales of the Model Y declined just 2% through August, and the model accounts for roughly one in three EVs sold in the United States this year. Tesla broadened the vehicle’s appeal this summer by launching a longer six-seat variant, the Model Y L.
The Model 3 sedan has fared worse, with sales down 34% through August. The Cybertruck has continued to disappoint after its initial launch hype, with only 9,769 sold in 2026 through August.
Tesla’s newest model, the Cybercab, has no steering wheel or pedals and is not yet available for consumer sale. The company also plans to relaunch its Roadster luxury sports car but has not announced a release date.
Even as Tesla continues to promote robotics, AI and autonomy as the future of its business, its grip on the U.S. EV market is unlikely to subside in the next five years, Murphy said. Without significant advances in battery technology or an abrupt reversal of federal regulations, mainstream automakers are unlikely to rush back into EVs, he said. “Without a change in the regulatory regime, it’s really a Tesla story,” Murphy said.