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
TBQ: meh who even cares anymore. How long has it been since Audi really mattered? If they went away tomorrow, I don’t know anyone who would notice.
Who are these EV owners who are switching back to ICE vehicles? That’s like saying “yeah indoor plumbing is cool, but I’ll just go back to having an outhouse.”
I’ve seen various research which indicates well over 90% of EV buyers subsequently buy only EVs. I’m thinking the share of people going from Tesla to Toyota hybrids is extremely small in absolute numbers, and therefore not as indicative of broader market trends as it seems.
However it’s crazy to me that Tesla was ever considered a “luxury” manufacturer. The Model S was pretty nice, but nowhere near S-class nice.
It’s people who don’t have easy access to charge based on videos and interviews I’ve seen. Lots of people jumped on the EV bandwagon with the tax credits, without doing any actual research. I’d bet many have since changed jobs or moved since the purchase, and the EV lifestyle doesn’t fit anymore. By comparison, a Toyota Hybrid is just a normal car, and you don’t have to plug it in daily.
Also remember ‘Luxury’ doesn’t necessarily mean nice or quality. Perception/Image is 90% of the game.
I could see that, as I have witnessed a few people on some EV forums who bought an EV seemingly not realizing it doesn’t take gas (how can you be that oblivious!?)
I just think this article makes it sound like tons of EV drivers are jumping back to ICE vehicles, when in reality that is vanishingly rare.
Poking the AI for answers, it’s extrapolation suggests 14375-17250 went EV->ICE, and 5125-6150 went EV->Hybrid, specifically for Tesla trade ins.
I wouldn’t say it’s vanishingly rare, as in total EV sales are significantly down 2025q2 to 2026q2. The gov subsidies are a large chunk of that, but not all. In total the sales are down 2.2%, about 110k fewer vehicles sold. Hybrid is up 9%/55k, ICE down 3.1%/100k, EV down 20.5%/44k.
2026Q2 Totals:
All data is from AI, so not sure if 100% correct. However it does suggest that a sizable chunk of previous EV drivers have traded the cord for a pump.
Frankly, as you mentioned, I’m just going to assume that data is hallucinated by AI as it’s very unreliable.
I do know one person who went EV to hybrid, but he had the hybrid for about 2 years before going back to a full EV (range and charging speed finally caught up with his needs).
Tesla owners are especially prone to remaining with EVs. I really think the true numbers are much rarer than what AI made up, and a lot of them might have other explanations (e.g., EV owner bought a second ICE/hybrid for their child, etc.)
I think the numbers line up rather well with reality. A 15,000 conversion in a country of 330+ million people from EV->ICE is definitely reasonable given that the EV subsidies no longer exist. These numbers align closely with what I see at work (automotive engineering).
EVs in general are more expensive than hybrids for the same tier of car, and it’s no secret sales dropped significantly after the subsidies were removed.
I think you’re drastically overestimating the proportion of ‘Tesla stans’ vs people just buying in on the hype and discounts. Most people don’t care what their powertrain is, they just want a cheap to operate appliance that gets them to their destination.
TBQ: What Audi with the needs to do is define their buyers! Who is their market? Design the cars for them and forget the rest! Everybody complains about Dodge Charger, Challenger, and Durango but damn do they know their buyers! Same with full sized pickups. Get the teams that figured them out and put them on the Audi project.
Every time I ride in a Tesla for uber I wonder how they ever were considered a luxury brand.
Image. That’s it. That said, same goes for the majority of ‘luxury’ cars these days.
Luxury in terms of price per unit footprint; see also highest % trade of BMW leases
Quatro.
Audi has had no focus for years now. What do they expect? They are just more expensive VWs with shit warranty and no sportiness. They used to have some cred in the enthusiast scene but I don’t see it anymore. Everything weighs a million pounds now.
Audi is just a more expensive VW with all the same problems.Make them reliable and less complicated.
How do I fix (an) Audi?
Well, the first thing you’ll need to do is remove the door panel. That way you can get to the power window motor that failed on a 5 year old car.
TBQ: there are far more qualified and better-paid people than me to answer this from a corporate perspective.
I’ll hazard a guess that they haven’t adapted well to the market and regulatory environment moving from their fields of strength (strong turbo motors, refinement, above-average handling, classy styling, and excellent short-term showroom/test drive impressions) to the current market of uncertain EV demand and stringent emissions and fleet economy requirements that have made their powertrains uncompetitive. Throw in the new downmarket styling and botched interiors and they don’t have much left to stand on.
Just copy whatever BMW’s doing. I don’t really like it but a lot of people you need sure do.
Audi: who cares? Maybe the world doesn’t need three premium German brands, maybe Audi just loses to BMW and Mercedes, it’s ok. They used to be desirable vehicles, to me, but that’s been a long time. The only Audi’s I seem to see are the midsized SUV’s and do we need more of those? So maybe they fold up shop one day, no loss. There’s one city in Germany that is very Audi-centric so it will hurt for them, but they’ll be fine. Look at Flint.
Wait… Edmunds has a head and a director of insights? Are those titles distinctions without a difference?
Think of the director of insights as the “neck” steering the “head” towards the insight they’re looking for. (or maybe it’s the other way around with the “head” telling the “neck” which way to pivot…)
For Audi, focus on mechanical simplicity and quality over overwrought infortainment, tech, nickel and diming with features, and brittle plastic parts galore to better differentiate vs other German brands. Be true premium. Not surface luxury. Advertise the crap out of it.
Kill all the extraneous ICE CUV variants (Q4/5/7) is good enough–no sportbacks. Offer the A3 as a premium hatch only. Since the A5 exists and the A6 is almost 200inches, Upsize the A4 a couple of inches focusing on interior space to make it a true mid-sized sedan with ICE, HEV, and BEV variants while ensuring a well equipped A4 BEV undercuts the stripper CLA by a couple of grand.
The opening of the bridge is only a conflict because of a jerk on our side of the span.
I probably should have said my side of the span as there are a significant number of Canadian members who should not have been lumped in. I regret the error.
Audi just doesn’t have anything that makes them special anymore. They used to be synonymous with AWD, and they used to be the go-to brand for turbocharged luxury cars, you could get a turbocharged Quattro decades before their competitors started taking turbos seriously for mainstream offerings.
As BMW and Mercedes-Benz started to improve their part-time AWD systems, Audi was trying to mitigate their own full-time system’s efficiency and handling quirks, losing all of its advantages in the process. Now that BMW, Mercedes and every other luxury brand’s flagships are turbocharged, AWD sedans, Audi has nothing special to offer anymore.
Audi will only lose more of its identity as the market is flooded with 2, 3 and 4-motor systems that outperform any set of differentials by default.
Subaru has managed to keep the McRae-Wannabe’s attention with one outdated model that they refused to update mechanically for 2 decades, and that’s exactly as hard as Audi would’ve had to work to keep the Mouton fans on board. The 21st century has seen Audi go from “the Quattro system is the best” to “as long as we have some way to send power to any given wheel, we can use brake-vectoring to make the car do anything”.
I maintain that selling one car to nerdy enthusiasts is how you build a reputation, there’s no advertising as powerful as “my car guy friend says it’s the best” when it comes to high-end products, and ignoring that market segment for 26 years is how you lose all brand identity.
Poor reliability and quality definitely don’t help, but without a brand identity, they just don’t stand a chance. Audi needs to excel at something, and right now there’s no easy choice, so they better start searching for a soul.
Audi needs to take a step back from the Gaping Maw book of Overstyling – and go back to the ABCs: Aerodynamic Bauhaus Cars.
Go heavy into EVs – get rid of superfluous grilles & vents.
For Hybrids – they get minimalist grilles, making model identification easy.
Go heavy into Avants and Efficiency – drop the Allroads and Q-softroaders, because you don’t need the CAFE advantages of SUV all-the-things for EVs and high-MPG hybrids.
Add a dash of reliability and ergonomics, and some solid warranty terms which bests BMW, Mercedes, Lexus and Genesis.
My personal opinion… all-EV Cars and SUV’s look weird with smooth panels in lieu of a grill of some sort. Toyota did a much better job with the current gen Prius than Tesla and their Model Y. The latter just remind me of the disappointment as a kid when you took Barbie or Ken’s clothes off and it’s just textureless plastic.
Maybe it’s just familiarity with grilles over the decades.
What’s weirder is a big “grille” that is half or more blanked off with ribbed/honeycombed black plastic.
Take me back to the 90’s with grille-less cars such as the Ford Taurus, Mercury Sable, VW Passat, Infiniti Q45, etc, etc.
Audi (and VW) would gain a lot of sales from people looking at a Lexus / Toyota or BMW/Mercedes if they offered their cars with a 10/100,000 warranty. I suspect that I’m not the only one that appreciates just how nice most German cars are when in one that a friend leased, but would never ever ever consider buying one with reliability and maintenance costs being pretty much the only reason why.
There in lies the problem, they’d have to engineer and manufacture cars that actually last 10/100k. If attempting to do so wouldn’t bankrupt them, the surge in eventual warranty costs will.
yup… until they make cars that frequently go 100K miles without bankrupting somebody I’m not interested.
TBQ: Big Boxy, and I mean BOXY Fender flare all the models. Just straight up take flares off the original Audi Quattro and put them on all models with big, flat grilles. I don’t think Audi remembers who it is, but to me it will always be that image of Rally dominance.
Gordie Howe bridge, its a microcosm of why Detroit has had such a hard time for so long. So many people do realize the critical potential of the city and yet all they do is take advantage of it (with the Ambassador bridge as a big example). I have been rooting for this bridge to be built and to open for years.
tbq: How do I fix Audi?
I’m pretty sure that a brand image of “paid too much for a Volkswagen” is helping. Sure, Audi has some other stuff, but the bulk of their offering is a bunch of Volkswagens in very, very flimsy disguises.
So my start is to make their bread-and-butter feel less mass-market.
Like GM in the Smith era. Thing is I don’t really think anyone gives a damn if Audi survives. To many stellar choices out there and that is before China. Lexus, Genesis, Mercedes, BMW, Porsche, Hell maybe even Land Rover (never mind Im wrong on that one). VW has lost the playbook going for volume and literally selling the same cars with different logos. Peoples car my ass. They belong down market, a beetle replacement, (have they seen what Renault is doing FCS?) the golf and its raised up kin, Jetta and maybe Atlas and let Audi do the top of the market.
But one thing I can tell you, anytime I hear the wind blow it will whisper the name… Edna
PS – I am gay
Me too. I’m not the only gay in this village.
The GM exception is noteworthy though. In a shocking plot twist, GM was not first to market with a half-baked, but good idea that they then killed right when the market was ready. They were actually a bit late to the EV game, but when they showed up, they showed up hard. Nobody has a perfect EV lineup right now, but GM came the closest. They have a competitive offering in basically every segment of the market, and to my knowledge they don’t currently have any serious Achilles’ heel (*looks meaningfully at Hyundai/Kia’s ICCU*).
GM (mostly deservedly) takes a lot of shit for bad product decisions, but in a sane world they would be sitting pretty with their EV lineup. As-is (i.e. an insane world), they’re doing better than anyone else who went all-in on EVs because they did it better.
Tesla was never a luxury brand, unless you looked at nothing but price. There’s never been anything particularly luxurious about their cars. They competed with luxury brands when they first launched because the only people who could afford them were luxury car buyers, but that doesn’t make them luxury.
I’m chuckling at that picture because the angle kind of makes it look like the Tacoma Narrows bridge mid-sway.
Right on about Tesla never having been luxury. The price and performance drove the perception, but the quality, materials, and design never matched that perception. It reminds me of all the “premium” brands that have tried to be considered luxury but always fall short, like Acura and Infiniti, except Acura and Infiniti actually get close to the mark on the quality, materials, and design but fail because the perception that they are fancied-up Hondas and Nissans.
Every time I ride in a Tesla I’m reminded just how shitty the ride quality is and how dog shit their interiors are. I wonder if the rattle trap interiors are directly because you can feel every single bump in your spine. Not even close to a luxury experience.
I had a Lyft ride last week in a 75K-mile Model Y last week and it was solid and completely rattle-free. I had a ride in one with less than 50K miles on it two days later and it rattled like a bucket of bolts. So, I guess it’s a QA issue and not an engineering one. It is pretty fun (and impressive) to watch the navigation screen depicting cars and pedestrians within the range of its sensors.
You make good points about GM but they did still make the Bolt right at the beginning of the EV wave, then kill it, only to immediately turn around and announce it coming back, its just that they actually did build other EVs of decent quality as they killed the Bolt. Yes I am being a bit pedantic.
That’s fair. GM gonna GM.
I still can’t believe they brought the Bolt back for only one year. There’s no way the financials on that could possibly make sense.
The original plan wasn’t to only sell the refreshed Bolt for 1 year. Then USMCA and other trade deals were torn up and plans changed.
I sure am glad the tariffs are protecting us from all the foreign cars being built in *checks notes* Kansas. /s
GM is moving production of the Buick Envision from China to Kansas. They will also make some of the Equinox there.
To be fair, the original Bolt was on a unique architecture, and the current one is on the Ultium platform that underpins all of their other EVs.
Announcing it was dead was probably a marketing move to clear out the 1st gens instead of people waiting for the 2nd gens
As a resident (currently) of Tacoma, your comment about the Tacoma Narrows bridge made me laugh. Perhaps interestingly, Tacoma has another bridge that uses the same cable-stayed type (S 21st St – WA SR-509 east/west from/to downtown) as the Gordie Howe Bridge (GHB). It hasn’t had any problems with swaying in the wind, so it lives in relative anonymity. The GHB reminds me also of the Zakim Bridge in Boston. I really admire their looks. There are beautiful examples all around the world.