Tesla’s sales in California are experiencing a decline, with registrations down by 15% in the first quarter of 2025, according to the California New Car Dealers Association. This is a significant drop for the electric vehicle market leader in the state, which has traditionally been a crucial market for Tesla.
California is known for its high demand for electric vehicles, with zero-emission vehicles accounting for more than 20% of new vehicle sales in the state, compared to just 8% nationwide. In terms of overall volumes, over 28% of electric vehicles sold in the US are in California, making it a key battleground for automakers in the EV space.
In 2022, Tesla held a commanding 70% market share of electric vehicles in California. However, with increasing competition in the market, Tesla’s market share has slipped to 60% in 2023. Now, with a 15% decline in registrations in Q1 2025, Tesla’s market share has further decreased to 43.9%.
The decline in Tesla’s performance in California can be attributed to several factors. The transition to the new Model Y has impacted deliveries, with 10,000 units fewer than in the same period last year. Additionally, CEO Elon Musk’s controversial political initiatives have led to backlash and protests, potentially tarnishing the brand’s image in the state.
Looking ahead, Q2 will be a crucial period for Tesla to gauge its performance in California. The company will need to deliver more than 50,000 units to avoid further declines in the critical EV market. While Tesla bulls are optimistic about the new Model Y, there are concerns about a lack of backlog orders for the redesigned vehicle.
Overall, Tesla faces challenges in maintaining its dominance in the California EV market amidst increasing competition and brand damage. The company will need to navigate these obstacles to regain its foothold and drive sales in the state.
