Rivian CEO says Tesla’s market share is shrinking because the market is ‘saturated’ with the Model Y and Model 3

In an interview with The Verge’s Decoder show, Scaringe said that while Tesla’s Model Y and Model 3 are excellent, they’ve also “fairly saturated” the market—and buyers want more choices.

“If you want to spend less than $50,000 for an EV, I’d say there’s a very, very small number of great products,” he told Decoder.

Tesla’s Model Y was the top-selling car model in the world last year, according to a report by JATO Dynamics, but Elon Musk’s EV maker fell under 50% market share in the U.S. for the first time earlier this month. The company’s second quarter revealed a 4.8% decrease in sales for the company and a 45% collapse in profit for the quarter ended in June.

Scaringe said that some unnamed EV companies have tried to replicate the look and feel of the Model Y because of its global success, rather than giving consumers diverse choices as they do in the gas-powered vehicle market. While he gives the Model Y credit for its quality, he said Rivian’s upcoming model, the R2, will be no copycat.

“That’s not to say Model Y isn’t a great car,” Scaringe said. “I think it’s an awesome car. I’ve owned one before. It’s just to say that I think the world needs more variety.”

Late last month, Rivian secured a $5 billion lifeline from Volkswagen that sent its shares up 50% after having sunk to record lows earlier this year. 

While in many ways Scaringe’s company is similar to Tesla, the chief executive said in a thinly veiled slight to Musk last month that he was letting the products do the talking instead of making bombastic statements as Musk has made about Rivian in the past. 

The overall EV market has continued to grow despite Tesla’s recent sales slide. EV sales in the U.S. grew by 11.3% year-over-year in the second quarter, according to a report by Cox Automotive. And estimates by Kelley Blue Book put EVs at about 8% of all new vehicles sold in the U.S. in the second quarter, up from 7.2% a year ago.

But while several new models are soon to be released, including Rivian’s R2, the number of different electric vehicle models sold in the U.S. has stayed mostly constant—and some big automakers have scaled back their plans.

Earlier this year, Musk canceled a long-awaited low-cost EV and pivoted the company to focus on robo-taxis. American carmakers Ford and GM have both also stepped back from ambitious EV plans recently.