Barclays released a March EV report card as EV penetration reached 14%, up m/m and y/y, but still below elevated 4Q22. Analysts believe April is poised to be a slight step back in uptake, in-line with typical 1st month-of-quarter patterns. Tesla (NASDAQ:TSLA), however, had an impressive March share, benefiting from price cuts and an increased focus on low-cost EVs exported from China.
China once again had the highest EV penetration rate among the major global regions (30% in March), yet was flat m/m. Rather, Europe drove the global m/m improvement, as Europe EV penetration increased +225bps m/m to 19%. US penetration was an offset, -120bp m/m to 7.8%.
Barclays analysts wrote in a note, “The US m/m decline is somewhat surprising to us given the favorable Clean Vehicle Credit dynamics in the US during 1Q, which reopened the full $7,500 credit to a number of vehicles, and most likely created a sense of urgency for some consumers given more restrictive guidance for the credits would go into effect in April. However, we note that 1Q US EV volumes/penetration may have been to some extent hampered by limited production of Ford (NYSE:F) and GM (NYSE:GM) EVs, as well as the recovery of ICE sales.”
Tesla saw a ~25% global BEV share in March, a sharp increase from the 18 to 21% range it has seen over recent months. Though the typical end-of-quarter “delivery wave” undoubtedly played a role, we note that the 25% share in March is above Tesla’s prior two last-month-of-the-quarter share results in Dec. and Sept. ‘22, which respectively saw 18% and 23% global BEV share.
“While we see the concerns around Tesla margins created by the price cuts as entirely warranted,” the analysts write, “we appreciate that the price cuts at least appear to be translating to stronger Tesla BEV market share, particularly in regions where competition is increasing. Yet as expressed on its 1Q earnings call, Tesla’s price cutting efforts are not necessarily with the intent of taking sales from fellow EV OEMs, but rather, to convert increased production volumes into sales. Thus, we see Tesla’s price cutting efforts at this point primarily being a competition method against ICE/hybrid vehicles rather than EV peers.”
Shares of TSLA are down 0.9% in premarket trading on Tuesday.