Electric car giant Tesla’s dominance in the US market is eroding. The company’s share of the electric vehicle market has fallen to its lowest level in nearly eight years, falling below 40%. The market decline was driven by the introduction of new, more affordable models from competitors.

Tesla Fails to Maintain a Stronghold in the US Market

Data from research firm Cox Automotive shows that Tesla’s US electric vehicle sales accounted for only 38% of the total market in August. This represents the first time Tesla’s share of the US market has fallen below 40% since October 2017. At that time, the company had just begun mass production of the Model 3.

According to the data, Tesla’s market share fell from 48.7% in June to 42% in July. This was the sharpest decline since March 2021. At that time, Ford had just launched the Mustang Mach-E.

Despite its declining market share, Tesla’s monthly sales increased by 7% to 53,816 units. In contrast, new electric vehicle sales overall increased by 24%. Rival manufacturers saw sales increases between 60% and 120%.

Tesla’s decline isn’t limited to the US. The company delivered 1.79 million vehicles in 2024, falling short of its 2023 sales figure of 1.81 million. This was Tesla’s first annual sales decline since 2011. Production also decreased by approximately 4% in 2024.

The company’s second-quarter deliveries in 2025 stood at 384,122, a 13.5% decrease compared to the same period the previous year. The Cybertruck, in particular, fell short of expectations.

Experts say the main problem with Tesla’s sales is the launch of newer, less expensive electric vehicles by competitors. While manufacturers like Rivian compete directly with Tesla in the US, Chinese BYD is rapidly rising in Europe and its own market.