Elon Musk once predicted that an end to America’s federal electric-vehicle tax credit would be painful for Tesla at first, but ultimately beneficial to the automaker in the long run.
He was right, at least in a relative sense.
Recent auto-sales data indicates that Tesla is once again gaining ground in the U.S. EV market as legacy automakers retreat from battery-powered cars. Musk’s company is back to comprising more than half of the U.S. EV market, with a 52% share in 2026 through August, up from 43% a year earlier, according to Motor Intelligence.
The company hasn’t escaped the wider EV downturn. Tesla’s 325,351 U.S. sales so far this year represent a 16% decline from a year earlier. However, the overall EV market has contracted more, down 30%.
Once accounting for more than 80% of U.S. , Tesla’s market share in recent years saw a multiyear slide as old-school carmakers like , Ford and General Motors introduced their own electric models. Tesla’s share eroded to an record low of 41% in 2025 as Musk’s foray into politics and work downsizing the federal government with the Trump administration turned away some buyers and sparked protests outside its stores.
Now, the Austin, Texas, company is regaining ground, even as it has de-emphasized its core auto business. Musk canceled Tesla’s luxury Models S and X without replacements as he focuses on fully autonomous vehicles and humanoid robots.
didn’t respond to a request for comment.
Jon Ward, a Los Angeles marketing executive, bought a Model Y in April—his third Tesla. While intrigued by Rivian’s new R2 SUV, Ward never seriously considered another brand mainly because of his reliance on Tesla’s automated driver-assistance software, called Full Self-Driving (Supervised), he said.
Trading in his 2018 Model 3 meant he and his wife no longer had to fight over FSD, which they had equipped only on their 2023 Tesla.
“I use it basically all the time,” Ward said. “It’s almost like, why would I bother driving? This does it so well.”
The driver-assistance software will be Tesla’s main selling point for the foreseeable future, said independent consultant John Murphy, a former Bank of America autos analyst. While Tesla overhauled its two volume vehicles, Models 3 and Y, in recent years, neither are totally new from the ground up. The automaker has shown little interest in building out a wider lineup of new cars.
“The perceived unique feature of FSD is the significant focal point now in their auto business,” he said. “Refreshing products and running a traditional consumer retail play is completely off the table at this point.”
Tesla’s newest model, the Cybercab, doesn’t have steering wheels or pedals and it’s not yet available for sale to consumers. Tesla also plans to relaunch its Roadster luxury sports car, but hasn’t said when that car will be available to customers.
Tesla’s U.S. sales peaked at 654,888 in 2023 and are on track to decline for the third consecutive year, according to Cox Automotive data.
What is really driving Tesla’s market share recovery, analysts said, is that there are many fewer alternatives. Legacy automakers, looking to stem their losses, have retreated en masse from EVs.
“Tesla is shrinking too, but just more slowly,” said Stephanie Valdez Streaty of Cox Automotive.
Some of the more popular alternatives—the Honda Prologue, Volkswagen ID.4, Ford F-150 Lightning—have either been discontinued or will be soon. Others, such as Chevrolet’s Equinox and Blazer and Ford’s Mustang Mach-E, are still around but the automakers have cut back their production significantly.
More affordable EVs once seen as Tesla challengers that could appeal to the masses are hardly registering in sales data.
GM resurrected its beloved Chevrolet Bolt earlier this year but decided to curtail production to one shift instead of two, and will phase the vehicle out in 2027 to make way for gas-powered vehicles. Nissan introduced the third generation of its Leaf EV this year but has indefinitely delayed the import of the vehicle’s most affordable variant from Japan.
With its luxury models gone, Tesla’s grip on the U.S. market owes almost entirely to its stalwart Model Y SUV. The Model 3 sedan is down 34% this year, according to Motor Intelligence. After its initial hype wave subsided, Tesla’s Cybertruck has proven to be a perennially slow seller, with only 9,769 sold in 2026.
Yet, the Model Y has held its ground, down only 2%. Every third EV sold in the U.S. this year has been a Model Y. This summer, Tesla broadened the vehicle’s appeal by launching a slightly longer variant, the Model Y L, with six seats.
Even as Tesla continues to promote robotics, AI and autonomy as the future of its business, its grip on the U.S. EV market is unlikely to subside in the next five years, Murphy said. Mainstream automakers aren’t likely to rush back into EVs without significant advancements in battery technology or an abrupt reversal of federal regulations, he said.
“Without a change in the regulatory regime, it’s really a Tesla story,” Murphy said.
Write to Christopher Otts at christopher.otts@wsj.com