Tesla

Once, owning an electric car was like driving a pocket protector. Tesla changed all that with sleek, fast EVs that stole customers from BMW and Mercedes-Benz while offering a very cool upgrade to the Prius crowd. 

Today, Tesla’s cool factor isn’t what it once was. You can thank politics for that, or more specifically, Tesla’s CEO for butting into them as the world watched and began to swear off Tesla’s cars by name. Now the chickens have come home to roost, and Tesla is in the “find out” era of what happens when politics affect brand image. So what does that mean for the rest of the EV field? 

Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: VW could consider bringing Audi production to the U.S. over tariffs, and the U.S. visa workaround at Hyundai’s Metaplant is reportedly an “open secret” amongst companies. Let’s jump in.

30%: Tesla’s EV Market Share Has Dropped To Its Lowest Point Since 2017

Photo by: Tesla

Tesla’s market share in the EV space is finally feeling the pressure of true competition. New data from Cox Automotive covered by Reuters reveals that Tesla’s market share has dropped to its lowest point since 2017.

The data shows that Tesla’s EV sales made up just 38% of all EVs sold in the U.S. last month. This is the first time that the automaker’s stronghold on the market has fallen under 40% since October 2017, which, if you recall, was while it was ramping up production for the Model 3 and was only able to deliver 26,137 vehicles in all of Q3 that year. Here’s what Reuters has to say about the flip-flop:

While other automakers are rolling out new EVs, Tesla has turned its focus to building robotaxis and humanoid robots, delaying and cancelling plans for cheaper electric vehicle models.

[…]

For now, Tesla’s core auto business remains its money maker. Its last new model was the Cybertruck pickup that rolled out in 2023 with nothing of the success of its Model 3 midsize sedan or Model Y midsize SUV. Tesla has refreshed the Model Y, once the world’s best-selling car, but the changes failed to live up to expectations, and Tesla is on track toward a second year of sales decline.

“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.

EV sales as a whole are being fueled by FOMO right now. As the end of the EV tax credit ticks closer by the minute, automakers are seeing some temporary green knowing all too well what is likely to come in October after the tax credit goes the way of the dodo. Hell, GM even had its best-ever EV sales month just as the government-subsidized chapter of America’s EV push starts to come to a close.

It could be that as other brands are being pushed up by sales of their cars, Tesla is finally feeling the pressure of what competition in the EV space really looks like. Reuters points out that Tesla’s new (yet somehow still stale) lineup has yet to really impress buyers. Meanwhile, automakers have unleashed more electrified options than ever before onto buyers in the U.S. This gives buyers plenty of Tesla alternatives to look at, especially during a time when its CEO has resulted in so many potential buyers swearing off or exiling the brand from their driveways.

This market share decrease could be the first in a big lull for Tesla. In recent months, Tesla has made it clear that it no longer wants to be just a car company. Its Master Plan Part 4 calls out the need to diversify and focus on AI solutions—whatever they may be—and put EV projects on the back burner. Tesla believes that by focusing on non-vehicle projects like its Optimus robot, it can build trillions of dollars in value for itself. And if it does that, it will reward its CEO handsomely.

As much as liberals may be cheering for Tesla’s decline after putting up with Musk’s antics for so long, it’s worth remembering that a Tesla sales slide brings the whole EV market down—and leaves the American auto industry in particular without a clear technology leader that can also sell mainstream cars. Maybe it’s time for someone else to step up. 

60%: Volkswagen Eyes Up U.S. Investments, As Long As Feds Play Ball

Photo by: Patrick George

As the tariff hammer continues to hit across the globe, Volkswagen and other European automakers are feeling the pressure. CEO Oliver Blume spoke at IAA Mobility in Germany on Monday, revealing that Volkswagen is in talks with the U.S. government as part of a trade deal that could lessen its financial burden from tariffs. Blume wasn’t specific about the specifics of the deal; however, he noted that Volkswagen would need support from the U.S. government in order to make it happen, potentially hinting that it could be looking at a significant manufacturing overhaul in exchange for better tariff-related terms.

Our EIC Patrick George was on that roundtable too; check out his story on VW’s future American electric plans here. In the meantime, here’s Automotive News:

The major manufacturing investment Volkswagen Group is mulling in the U.S. as part of trade talks with the Trump administration would create light-vehicle export opportunities down the road, CEO Oliver Blume said.

Talking during a media roundtable at the IAA Mobility show here on Sept. 8, Blume said the U.S. investment would add employment, fortify communities, build new supply chains and support future taxes and exports.

[…] “We are losing a high amount of money because of the tariffs,” Blume said. “The 15% tariffs are burdensome for Volkswagen Group and we welcome the opportunity to come to a signed agreement quickly. I’m counting on it.”

While he described the nature of the talks as good, he said VW Group would “clearly need support” in the form of incentives or tax breaks for the project.

“We can’t afford to pay for everything,” he said, referring to tariffs and any new major plant investments.

The 15% tariffs Blume is talking about technically aren’t yet in effect. European automakers are waiting on the EU and the U.S. to finalize a trade agreement to make that official. In the meantime, Blume says that the tariffs have been a multi-billion-dollar “burden” on the VW group.

The Guardian reports that the CEO says that the brand is considering the possibility of localizing production of Audi-branded cars to the U.S. The automaker has already raised prices on some of its models as much as $4,700 in response to tariffs, but cutting costs for Audi models may not be the primary factor at play.

Blume says that VW knows it needs to approach any price hike “carefully.” If it pushes all of its costs onto consumers too quickly, it could backfire. And with VW already having a tough few years (Volkswagen Had A Tough Year. Here’s Why 2025 Could Be Tougher), it needs to tread very lightly with any move that could make consumers consider competitors’ cars.

An interesting spin on localizing Audi production is what it means for BMW’s stronghold on building luxury vehicles in the U.S. BMW currently builds a significant portion of its SUVs in South Carolina to avoid tariffs. BMW’s move is a response to the chicken tax, a tariff that continues to spill onto consumers more than 60 years after it was introduced in the 1960s. But today, BMW is the largest automotive exporter in the U.S. by value, namely thanks to its Spartanburg plant. Could Audi be a runner-up in the future?

90%: Korean Companies Say Hyundai’s Visa Problem Was An ‘Open Secret’

Photo by: Patrick George

Everyone is still trying to figure out exactly what happened with Friday’s massive immigration-related raid on Hyundai’s Metaplant in Georgia. The act itself put Korean companies into a tailspin, especially the ones that enabled the misuse of the B-1 visas provided to a large number of the staff detailed as part of the raid.

It turns out that the misuse of these visas is an “open secret,” according to reporting from the Financial Times that involved several individuals familiar with Korean firms in the U.S. that were involved with staffing workers for Hyundai’s plant. And it’s not just subcontractors for Hyundai taking advantage of the loophole.

The Financial Times reports:

Several people familiar with Korean conglomerates in the US said it was an “open secret” that they and their subcontractors used the B-1 visa, which allows entry to the US for business purposes but does not allow the holder to work for payment, as well as the Electronic System for Travel Authorization (ESTA) system that facilitates short-term business visits.

“The business community, the Korean government and diplomats have been well aware of this problem all along,” an executive from a leading industry group said. “We are very worried that ICE can target other Korean facilities too because they have been following the same practices and have similar problems.”

What’s actually being highlighted here is a collision of priorities. In fact, the Financial Times reports that a senior South Korean official said that companies have been placed in an “impossible position.”

On one hand, the U.S. government is pushing companies to build their products in America, no matter what it takes. The federal government is swiftly enacting sweeping tariffs, many of which were recently ruled unlawful by an appeals court. Meanwhile, companies are stuck trying to figure out what the tariffs mean for their financial outlook (and the consumers who will ultimately be footing the bill).

On the other hand, the companies deciding to sink the money into building in the U.S. are doing so rapidly to minimize the cost impact of the tariffs. But in the name of speed, the contractors filling in the work appear to be cutting corners to make sure the job gets done within the required timeframe—hence the “open secret.”

This has caused some animosity towards the U.S. and its rapid change in trade policy:

“The US government is two-faced,” Chang Sang-sik, Korea International Trade Association’s head of research, told Financial Times. “It is asking Korea to invest more in the US, while treating Korean workers like criminals even when it is well aware that they are needed for these projects to happen.”

Suppliers and contractors claim this problem stems (at least in part) from a lack of skilled and reliable workers in high-growth areas, such as Georgia. Other high-ranking corporate suits echo similar sentiments to Sang-sik, noting that labor is indeed one of the most significant problems for companies looking to stand up these factories at lightning speed.

“[Manufacturers] need to build a factory very, very quickly, and it’s very difficult to do that with extreme labor shortages in the US where people are willing to jump ship every time someone opens another factory down the road,” said Jonathan Cleave, the managing director for Korea at consulting firm Intralink. “The Koreans don’t need a workforce that’s loyal to the grave, but they want people who will come in and finish a project.”

100%: What Automaker Can Become The Next Mainstream EV Leader?

Rivian R2 accessories

If Tesla is moving beyond cars and many other automakers back off on EVs as the tax credits go away, who steps up in its place? Maybe Rivian can fill Tesla’s void, starting with the R2 next year and the R3 models after that. Who do you think can pick up the torch? Let us know what you think in the comments.