It had reached 80% at its peak but has since fallen to 38%: Tesla's market share in electric cars is plummeting in the United States.

Tesla is in freefall in the United States. The electric car brand has seen its US market share fall to its lowest level in nearly eight years. Electric vehicle (EV) buyers are increasingly turning to expanding competitors in the face of Elon Musk's aging lineup, according to data from research firm Cox Automotive, released exclusively to Reuters.

In August, Tesla accounted for 38% of total U.S. electric vehicle sales, up from more than 80% of the U.S. EV market. This is the first time the company has fallen below 40% since 2017, when it ramped up production of the Model 3 , its first mass-market car, according to early data from Cox.

According to Cox data, sales of new electric vehicles jumped more than 24% in July compared to the previous month, thanks to the imminent end of the $7,500 electric vehicle tax credit and attractive offers.

While Tesla saw its sales increase by 7%, its market share declined. According to Cox data, Tesla's market share fell to 42% in July, down from 48.7% in June. This was the company's largest decline since March 2021, when Ford launched its Mustang Mach-E electric vehicle , according to a Reuters analysis of the data.

In August, Tesla's growth in the United States slowed to 3.1%, while the market as a whole grew by 14%, according to preliminary data.

The ranking for the second quarter of 2025 (April to June) already showed a decline in this market share, to 48.5% according to data relayed by the Clean Technica website . Tesla, however, remains ahead of its competitors, with Chevrolet at 9.2%, Ford at 5.5% and Hyundai at 5.3%.

While other automakers are launching new electric vehicles, Tesla has turned its attention to designing robotaxis and humanoid robots , delaying and canceling plans for cheaper electric vehicle models.

Much of the company's valuation rests on this bet. On Friday, Tesla's board proposed a new compensation package for Chief Executive Elon Musk , valued at around $1 trillion (€853.1 billion), tied to ambitious performance targets focused on growing artificial intelligence-based products and adding $8.5 trillion in value over the next decade.

But the automotive business remains Tesla's main source of revenue for now, as the company heads toward a second decline in annual sales.

"I know they position themselves as a robotics and artificial intelligence company. But when you're an automaker and you don't have new products, your market share starts to decline," Stephanie Valdez Streaty, director of industry research at Cox, said in an interview with Reuters.

For years, as the market leader, Tesla was able to rapidly increase sales and charge high prices for its vehicles, allowing it to reap profits. But with slowing sales and the arrival of numerous competitors, Tesla has had to lower its prices in recent years, reducing its margins and worrying investors.

Elon Musk's far-right political activities and his involvement in Donald Trump's administration until last May also hurt the brand.

July data showed that Elon Musk's company is lagging behind its competitors. Hyundai, Honda, Kia, and Toyota have implemented larger incentives than Tesla and have boosted electric vehicle sales by 60% to 120%, increasing their market share.

"These traditional manufacturers are all taking advantage of this sense of urgency and are able to offer attractive offers on their vehicles, and it's working," said Stephanie Valdez Streaty, estimating that "this momentum will continue through September."

Analysts expect the rise in electric vehicle sales to continue through September in the United States, then slow when federal tax credits expire at the end of the month, increasing financial pressure on Tesla and other automakers.