Registrations of new Tesla vehicles in California fell 24% in the April to June period, marking the third consecutive quarter that the company posted a sales drop in the state where it was founded.
High interest rates, stiff competition from other automakers and new interest in less-expensive hybrid cars has softened demand for Tesla’s premium vehicles.
In addition, some potential customers have been shying away from buying Teslas due to CEO Elon Musk’s increasingly polarizing persona.
Musk’s embrace of Republicans and outspoken comments have sparked concerns about Tesla’s brand.
The world’s richest man publicly endorsed former President Donald Trump for the first time in the U.S. presidential race after the assassination attempt on Saturday.
California remains Tesla’s biggest market, and Tesla’s Model Y remains the top-selling car in the state, according to the California New Car Dealers Association. However registrations fell from 68,827 in the second quarter of 2023 to 52,211 in the latest quarter.
The battery electric vehicle market slipped only 1.3% during the same period, while sales of hybrid vehicles surged 22% in California.
“Tesla’s allure seems to be wearing off, signaling potential trouble for the direct-to-consumer manufacturer,” the report said.
Tesla has seen its registrations in California slump even as distant rivals such as Hyundai Motor, Kia Motors, BMW, Mercedes-Benz, Ford, and Rivian increased sales by double-digit percentage points.
In 2021, Tesla moved its headquarters from California to Texas, and Musk said this week his other companies such as Space X and X will follow suit over his disagreement with Gov. Gavin Newsom’s approval of a bill on transgender kids.
Tesla, which is set to report quarterly results on Tuesday, handed over more vehicles to customers in the second quarter than analysts had expected, although deliveries were lower than a year ago.
Reuters contributed to this article.
