Tesla’s Sales Slump Deepens in Key EV Market of California

• Tesla registrations in California dropped over 20% year-on-year in Q2 2025, marking the seventh straight quarterly decline.
• The fall in Tesla sales contributed to a broader dip in the state’s EV market share, down to 18.2% from 22% a year ago.
• Brand damage from Elon Musk’s political activity and lack of new models are blamed for the automaker’s underperformance.

Tesla’s dominance in California is crumbling. The electric carmaker, long the leader in the US’s largest electric vehicle market, saw a sharp drop in registrations during the second quarter of 2025, according to the California New Car Dealers Association (CNCDA).

Registrations of new Teslas fell by more than 20% compared with the same period last year, marking the seventh consecutive quarter of year-on-year decline in the state. This is despite the overall new car market in California growing in the first half of the year.

The decline is not just a Tesla problem. The CNCDA noted that the brand’s slide had dragged down the entire electric vehicle segment in the state. Zero-emission vehicles made up 18.2% of new car sales in Q2 2025, down from 22% in 2024.

Tesla’s struggles come at a time when the company is facing intense public scrutiny and rising political backlash. CEO Elon Musk’s controversial involvement in US politics, including his high-profile work on DOGE and support for the Trump administration, has reportedly turned off many potential buyers, especially in liberal-leaning California. The state was also the birthplace of the Tesla Takedown movement, a grassroots protest against Musk’s political affiliations.

The company is also grappling with product stagnation. A refreshed version of its top-selling Model Y, released earlier this year, has not been enough to reignite demand. Tesla has not launched a completely new model since the Cybertruck in 2023, which has had limited commercial success. Just 11,000 units have been sold so far this year, according to Cox Automotive.

Looking ahead, Tesla faces further headwinds. The $7,500 federal tax credit for US-made electric vehicles is set to end in September for many models, which could dent demand even further. In response, Tesla has rolled out a suite of incentives, including free supercharging for select Model 3 buyers and the ability to transfer Full Self-Driving features at no cost.

Tesla is scheduled to report second-quarter earnings after markets close on Wednesday. The company has already disclosed that global deliveries dropped 13.5% year-on-year in Q2, making it the second straight quarter of declining worldwide sales.

Despite the negative sales trend, Tesla continues to draw interest with its retro-futuristic diner concept in California, which has generated long queues. But while diners may be flocking to its themed experience, the appetite for Tesla’s cars in its home state appears to be shrinking.

If you enjoyed this article, be sure to follow us on Microsoft Start.