Tesla Stock Faces Pressure as Market Share Slides to 2017 Levels

Tesla Inc. (NASDAQ: TSLA) is under pressure as its U.S. electric vehicle (EV) market share has plummeted to levels not seen since 2017, signaling intensified competition within the sector. This decline arrives amidst strategic shifts within the company and increasing scrutiny of CEO Elon Musk's leadership and compensation.

The stock is currently facing headwinds, reflecting investor concerns about Tesla's ability to maintain its dominance as other automakers aggressively enter the electric vehicle arena. Year-to-date, the stock has declined -8.67%, indicating a struggle to keep pace with broader market gains.

Market Share Erosion and Competitive Landscape

In August 2025, Tesla's U.S. EV market share contracted to 38%, a significant drop from its previously held position of over 80%. This erosion is primarily attributed to the emergence of rival EV models from manufacturers like Hyundai, Honda, Kia, Toyota, and Volkswagen. These competitors are not only introducing new models but also offering substantial incentives, thereby luring consumers away from Tesla's aging lineup. Although Tesla's sales have experienced modest growth, they haven't kept pace with the overall market expansion, leading to a diminished market share. The company's strategic pivot towards projects like robotaxis and humanoid robots, while innovative, has resulted in a perceived neglect of new, affordable EV models.

Musk's Compensation and Governance Concerns

Adding to the complexity, Tesla's board has proposed a monumental $1 trillion compensation package for CEO Elon Musk. This package is contingent upon achieving ambitious performance targets, including an $8.6 trillion market capitalization and the successful scaling of its robotaxi and humanoid robot initiatives. While this move underscores Tesla's reliance on Musk's leadership amidst a competitive landscape, it has ignited debates regarding corporate governance and potential shareholder value dilution. Markets are carefully watching how this proposal will play out, given its potential impact on investor sentiment and the company's strategic direction.

Furthermore, Elon Musk's political activities have impacted Tesla's brand perception. His involvement in various political matters has alienated segments of Tesla's consumer base, particularly in Europe, contributing to a decline in sales. This highlights the intricate relationship between corporate leadership actions and consumer sentiment in the EV market.

Analyst Outlook and Future Projections

Analysts foresee a continued decline in Tesla's U.S. EV market share as more affordable and diverse EV options become available. Projections indicate that Tesla's market share could fall to 18% by 2026, a steep drop from the 62% it held in 2022. This anticipated decline reflects the growing competition and the increasing availability of EV models from various automakers. Markets are adjusting to this new reality, reassessing Tesla's valuation in light of these challenges.

Price Targets

Analyst Summary: Bull and Bear Cases

Tesla's current market share decline is a confluence of factors, including increased competition, strategic shifts towards advanced technologies, and the reverberations of CEO Elon Musk's political activities. While the company continues to innovate, its ability to maintain a dominant position in the rapidly evolving EV market will hinge on its responsiveness to consumer demands, competitive pricing strategies, and the successful execution of its ambitious technological initiatives. This confluence of factors is likely to impact investor sentiment and future price action.