Shares of electric vehicle (EV) stocks are witnessing significant gains in pre-market trading on Friday. Luxury EV maker Lucid Group, Inc. (NASDAQ: LCID) saw a rise of 0.76%, battery researcher QuantumScape Corporation (NYSE: QS) increased by 1.39%, and electric van, truck, and SUV start-up Canoo Inc. (NASDAQ: GOEV) soared by 6.69% by 07:27 a.m. ET.
Bank of America Report Highlights Decline in Tesla’s Dominance
The catalyst behind this surge can be attributed to a recent report released by Bank of America. The report predicts a significant decline in Tesla’s dominance in the U.S. electric vehicle market. Tesla’s market share, which reached an impressive 78% in 2018, has been steadily decreasing to 62% last year and 54% earlier this year.
According to CNBC, Bank of America projects that by 2026, less than 1 in 5 electric vehicles sold in the U.S. will be branded with Tesla’s nameplate, accounting for only 18% of the market.
While this may seem like positive news for competitors such as Lucid, Canoo, and QuantumScape, as they produce EVs that directly compete with Tesla or provide components for rival companies, it may not be as promising as it appears for investors today.
Bank of America’s report suggests that the focus of EV manufacturing will shift not only away from Tesla but also from “newer entrants” in the car market, which likely includes companies like Lucid and Canoo. Currently, alongside Tesla, these newer entrants hold approximately 65% of the EV sales in the U.S. However, Bank of America anticipates their combined market share to decline to just 30% by 2026.
Ford and General Motors Poised for Growth in the EV Market
This raises the question of who will benefit from the market share lost by these companies. The answer seems clear: Automotive giants such as Ford Motor Company (F) and General Motors (GM), who were slower to enter the EV race, will see their market share grow as they transition from producing combustion engine vehicles to electric ones.
Bank of America predicts that Ford and GM will each hold a 14% market share within the next three years, a significant increase from their current combined market share of less than 13%. Other major players like Stellantis, VW, Volvo, Toyota, and Hyundai will make up the remaining 70% market share, as per the banker’s analysis.
Profitability Concerns for Lucid, Canoo, and QuantumScape
Nevertheless, there is still some hope for newer entrants like Lucid, Canoo, and QuantumScape. If 30% of the market remains open for them in 2026, with Tesla occupying only 18% of that segment, there is a potential 12% market share available for other players to compete for.
However, even if Lucid and Canoo secure their positions within this segment, profitability is not guaranteed. S&P Global Market Intelligence estimates suggest that in 2026, Lucid will continue to incur losses, while Canoo may achieve its first profitable year. In contrast, Ford and GM are projected to generate net incomes of $6.2 billion and $9.7 billion, respectively.
Canoo GOEV LCID Lucid Group NASDAQ: GOEV NASDAQ: LCID NYSE: QS QS QuantumScape Corporation
