Bank of America: The automotive industry is re-embracing internal combustion engines, and Tesla is still expected to expand its market share
The Bank of America report points out that the global automotive industry is facing a dual pressure from power systems and policies, forcing companies to refocus their strategies on traditional internal combustion engine fields. In the next four years, key factors for the survival of car manufacturers include the speed of new vehicle replacement, competitiveness of sales channels, and market share. Bank of America warns that car manufacturers must rely on their internal combustion engine product lines to maintain cash flow in order to cope with periods of severe volatility. Tesla and other new entrants in the electric vehicle market are expected to expand their market share, while Nissan faces the risk of contraction
According to a report from Bank of America, the global automotive industry is facing a dual blow from power systems and policies, forcing companies to refocus their strategic priorities back to traditional internal combustion engine fields. The bank believes that the key factors determining the survival of automakers in the next four years will be the speed of new vehicle replacements, the competitiveness of sales channels, and market share.
Bank of America emphasizes that the industry is currently experiencing two major shocks: 1) The false prosperity of electric vehicles has collapsed, with weak consumer demand and a retreat of government subsidies, leading to a complete disruption of electrification plans; 2) The intensification of the tariff war has increased uncertainty, hindering new vehicle launches in 2026-2027, and the restructuring of the supply chain is dragging down industry recovery.
In this context, Bank of America warns that automakers must rely on their internal combustion engine product lines to maintain cash flow in order to cope with the severe volatility expected in the next four years.
Based on replacement rates and product portfolio forecasts, Bank of America categorizes companies into three groups: High-risk camp: Nissan faces the risk of shrinking market share due to low replacement rates and unclear strategies.
Automakers with potential for market share growth: Tesla (TSLA.US) and other OEMs (including new electric vehicle entrants Lucid, Rivian, Polestar, as well as Volvo, JLR, Mazda, Subaru, Mitsubishi, etc.) are expected to expand their share due to high replacement rates.
Automakers that can maintain current market share: Most traditional automakers are temporarily holding onto market share by controlling their pickup/SUV product lines.
The differences in replacement rates among major automakers seem to be narrowing again, primarily due to the timing of product launches and the time window analyzed by Bank of America. This is particularly evident in the 2026-2029 range, where Toyota (TM.US) is at the low end but is expected to perform well in 2025 and show strong performance by 2030. However, other OEMs, Tesla, and Volkswagen are at the high end, while Toyota and Nissan are at the low end.
Additionally, factors related to product segmentation should also be considered. Taking all these factors into account, Bank of America believes that the relative differences in product replacement rates and other factors may drive slight changes in market share before 2029, but the next two years could be drastically different
