Tesla Inc. has lost its position as the top seller of new electric vehicles in California, a market that accounts for nearly a third of all zero-emission vehicle purchases in the United States. The company’s share of EV sales in the state fell to 43.9% in the first quarter, down from 55.5% a year ago, according to the California New Car Dealers Association. This decline comes as Tesla faces challenges including an aging product lineup and backlash against CEO Elon Musk’s political activities. Meanwhile, sales of other EVs rose 35% during the same period, with Tesla registrations dropping 15%. The California market is crucial for Tesla, as the state remains the largest EV market in the US, accounting for 31.1% of registrations last year. Despite the overall decline, Tesla’s Model Y and Model 3 remained the top-selling EVs in California, although the Cybertruck ranked eighth among all EVs with 2,282 registrations during the quarter.
Key Factors in Tesla’s Decline
The California New Car Dealers Association cited Tesla’s aging product lineup and backlash against Musk’s political initiatives as key factors in the decline. Tesla faced manufacturing disruptions during the first quarter due to production line changes for the Model Y redesign. Additionally, concerns about potential tariffs on imported parts under the Trump administration may have influenced consumer behavior. While Tesla’s global deliveries fell to their lowest since mid-2022, the company’s sales in California dropped to 42,322 vehicles during the first quarter.
Market Response and Future Outlook
Other EV manufacturers saw significant gains in the California market. The Honda Prologue and Hyundai Ioniq 5 SUVs followed Tesla’s models in sales rankings. Ford’s F-150 Lightning ranked outside the top 8, with Tesla’s Cybertruck beating it in sales. As the EV market continues to evolve, Tesla faces increasing competition in its historically stronghold market. The company’s decision to move its corporate headquarters from Silicon Valley to Austin in late 2021 marks a significant shift, though California remains a critical market for its sales.
