Tesla owners remain extremely loyal to the brand, even if that loyalty has slipped a little in recent years. The main beneficiary of that slip has been Toyota, which has picked up a lot of slack. The change in behavior of Tesla owners says a lot about the state of the larger car market and the way the brand has positioned itself.
Obviously, hybrids are key, and automakers with hybrids continue to largely do better than automakers without those offerings (GM being an exception). Audi is a good example of a brand that has shed its hybrid offerings and now faces a shaky future. Not far away, Porsche is also in rough shape, and has worked out a deal with its employees to cut another 5,000 workers.
I was hoping the Gordie Howe International Bridge was going to open while I was in Detroit last week, but I missed it by a few days. It is opening today, which is a boon for the car industry, even if the bridge itself represents a lot of the conflict between the countries it’s supposed to connect.
A Tesla Owner Who Goes To A Franchised Dealer Is About As Likely To Get A Hybrid As An EV
You know I love a chart, and this one from Edmunds is interesting. It shows what Tesla owners are getting after they trade in a vehicle to a franchised dealer. Obviously, there are no franchised Tesla or Lucid or whatever dealers, so we’re just looking at the people who took a Tesla they owned and decided to get something from a more traditional OEM.
Overall, Tesla owners are loyal, although the most recent brand loyalty survey from LexisNexis shows the brand dropping from its usual position of most or second-most loyal to third with a 55.9% loyalty rate, which is still better than the overall average of 51.4%. There are probably a lot of reasons for this, including the fact that Tesla owners were limited in choices for good EVs a few years ago, and now there’s a lot more competition.
As you can see, the Decade of the Hybrid continues to march forward, with Tesla trade-ins to franchised dealers jumping from 5.4% in 2021 to a full 20.5% in Q2 2026. Is the drop in EVs from 40.2% to 22% a reflection of a pulling-forward of sales from people trading in cars to get ahead of the end of tax credits? Probably. This is also likely reflected in the jump in gas-powered vehicles.
“The big story right now is that hybrids are delivering the sweet spot consumers are looking for,” said Jessica Caldwell, head of insights at Edmunds. “As the math on EVs shifted following the federal tax credit ending, legacy automakers stepped in to catch shoppers who want efficiency without pure-battery commitments. Seeing experienced EV owners make that pivot tells you a lot about the current state of the overall market, not just Tesla.”
That’s a fair point. Tesla is good for a grabby headline, but likely everyone is into hybrids now given the relatively low cost and the fact that some popular models (RAV4, Camry) are only available as HEVs.
There’s something also curious here, which is that Toyota has grown from the seventh most popular trade-in (6.9% of total in 2021) to the most popular (17.3% in 2026). Who fell? German automakers.
“Axing the Model S and X officially marks the end of Tesla’s status as a luxury brand,” said Ivan Drury, director of insights at Edmunds. “German luxury brands once split over a third of Tesla trade-ins and now they’re capitalizing on roughly one in seven trades, with Toyota as the biggest beneficiary. Tesla’s buyers, like its products, have gone mass market.”
Again, the data provides a lot of insight into how Tesla has changed. In 2021, there aren’t a lot of EV trade-ins because your options were, what, the Chevy Bolt and Nissan Leaf? Who is trading in a Model S on a Chevy Bolt? Now that Model 3 and Model Y have taken over the bulk of Tesla sales, of course the overall complexion of trade-ins changes as well.
Tesla is no longer a luxury brand, unless you consider everyone having a strong opinion about what you drive a luxury.
Audi Continues To Be In Rough Shape
I remember writing an article about how Audi was lost, and I thought it was recent. My “Audi Has Lost The Plot” TMD is actually from January 2025. There are some interesting products on the horizon, so it’s not hopeless. The situation is, however, dire.
The company just downgraded its own expectations due to underperformance in the Middle East, North America, and especially China. The automaker (which includes Bentley and Lamborghini as subsidiaries) expected to hit a profit margin somewhere between 5-7% this year. So far, the company is at 3.6%.
Things will have to change.
“Global challenges are increasing the pressure to act,” Audi CFO Juergen Rittersberger said.
“To remain competitive on the global stage, we must work together with the Volkswagen Group to realign our business model and implement large-scale structural improvements.”
The first step is probably reducing capacity, but that’s not a growth strategy.
Porsche To Cut 5,000 Jobs
Porsche has a new CEO and is facing the same problems every other Volkswagen luxury brand is facing in terms of tariffs, demand, China, et cetera.
As Bloomberg reports, the company is going to reduce headcount to try to right-size its production costs:
Porsche AG agreed to eliminate 5,000 jobs by 2035 as part of a deal with labor officials that protects its main German sites and rules out compulsory redundancies.
The positions will be cut through a mixture of natural attrition, expanded partial-retirement programs and voluntary severance agreements, Porsche and its general works council said Monday. Employment and site protections at Zuffenhausen and Weissach will be extended through the end of 2035.
The agreement underscores the mounting pressure across Porsche parent Volkswagen AG, which last week warned that group revenue may fall as much as 3% this year as its China slump deepens.
Between Audi and Porsche, Porsche remains the stronger brand with a little more aura.
The Gordie Howe Bridge Finally Opens
After becoming a bit of a political football, the Gordie Howe International Bridge between Canada and the United States is finally open today. That’s fun. It looks incredible.
The Detroit Free Press was at the opening ceremony on the Canadian side, where surely things have cooled off a bit:
At a question and answer session with media following the news conference and ribbon cutting, Gregor Robertson, Canada’s minister of housing and infrastructure, attributed the decision to disinvite U.S. officials to the event to President Donald Trump’s plan to impose 50% tariffs on certain Canadian goods.
“We felt the focus should be celebrating here in Canada,” Robertson said, adding that there were some Americans at the event.”
I wonder who the token Americans were.
What I’m Listening To While Writing TMD
“I’ll be here in the morning” from Townes Van Zandt to start off the week just feels right.
The Big Question
What does Audi have to do to turn it around?
Top shot: Toyota, Tesla
My favorite way to turn around my old Audi A3 in the snow was pulling the hand brake, but I’m guessing that is no longer available in anything now, and replaced by an electronic button. Maybe they should focus on upscale simplicity.
The title is misleading. It should read: “Tesla owners turn to Toyota. ” It fits their expectations for perceived quality and brand recognition. The latter is why you don’t see them moving to Chevrolet. That would be too big a status stepdown for them.
Speaking of Chevrolet. It disproves your proclamation of decade of the hybrid. Hybrids are selling in high numbers because, for the most part,that is what the companies are offering. How many Toyotas offer a nonhybrid engine? Same question for Honda, Hyundai, and Kia? Chevy sells more diverse cars because they offer the choice.
TBQ: Audi. Bring in good designs and killer product placement. It worked before and can work again.
Townes Van Zandt’s cover of “Dead Flowers” is the best.
“Tesla is no longer a luxury brand, unless you consider being mocked by children in your Cybertruck a luxury.”
I did a double take at the author name after reading that since Matt tries so hard to be Switzerland in all situations. Sick burn.
Lol, I ended up changing it. Maybe too sick!
TBQ: Hopefully VW as a whole will have a “come to jesus” moment and decide to make solid interiors again. The MK8 GTI I got as a rental recently felt just as crappy as every MK4/New Beetle my friends in high school had, minus the crayon/color pencil smell.
Audi had hybrids? They must have sold dozens…
Audi has always been largely pointless to me. They have rarely been on par with Mercedes and BMW, historically more Volvo and Saab. The AWD schtick carried them for a long time, but now everybody does that – so why bother with an expensive VW with delusions of grandeur and even more questionable engineering and quality control?
I guess they could go back to being clean-lined handsome cars with nicer interiors than the price would have you expect. Or something. I honestly have never really cared about them at all.
Interesting about Teslas and trade-ins. As I have said here before, at one point there were 8 Teslas in my relatively immediate circle of friends and family. Today there are a big fat ZERO. But 7/8ths of those folks still drive EVs. One went for a PHEV Volvo, because he is the typical “space cadet genius” type who can do calculus in his head but can’t remember to plug in his car every night. Having a gas station on every street corner means not getting stranded places, including his house.
And as I have been saying around here for years now, the best use of 300 miles of battery is putting 30 miles of battery into 10 cars. Shame nobody makes a PHEV that isn’t stupid. For me, Volvo came close, but no cigar. If I wanted a Polestar Edition I would date a stripper.
What does Audi have to do to turn it around?
Go back to what made Audi’s good. Quality interiors with actual ergonomic physical controls, understated clean exterior designs. Find away to not be German and lighten the hybrids. Make a new Sport Quattro.
TBQ: Audi has “The Buick Problem” Volkswagen is below them as the mass market brand, Porsche is above them as the luxury/high-performance brand so what’s an Audi?
I think Audi would do well to become “luxury Subaru”. The customer who goes glamping, wants to visit national parks but also stay in the nearest resort or luxury cabin.
It’s a niche that Land Rover somewhat has but could easily be secured by another brand