(Reuters) – Tesla saw a decline of about 12% in electric-vehicle registrations in California last year, as indicated by industry data. This suggests that the automaker is facing increasing challenges in a key market within the United States. Factors such as high interest rates, stiff competition, and the launch of a restyled Model 3 sedan have contributed to a decrease in Tesla’s sales in California. Furthermore, CEO Elon Musk’s involvement in the U.S. election may have worsened the situation.
The California New Car Dealers Association, in a report released on Jan. 31, expressed concerns about Tesla’s performance in the state, noting that the brand’s dominance in the electric-vehicle market has been on a decline, with five consecutive quarters of registration drops. Despite these challenges, the Model Y crossover maintained its status as the top-selling vehicle in California, with approximately 129,000 units sold in the previous year. In contrast, the Model 3 sedan came in second place, with around 53,000 cars delivered.
Data sourced by the industry body revealed a 36% decrease in Model 3 sales compared to the previous year, a development that was initially reported by Bloomberg News earlier on the same day. Tesla’s global deliveries also experienced a decline for the first time in the past year, attributed to high borrowing costs and competition from Chinese and European automakers.
In a report exclusive to Reuters in November, it was disclosed that Donald Trump’s transition team was considering eliminating the $7,500 consumer tax credit for electric vehicle purchases as part of a broader tax-reform legislation. If this federal tax credit were to be removed by the Trump administration, there were discussions of California possibly introducing state tax credits as an alternative. However, it was noted that Tesla’s electric vehicles might not qualify for these incentives, as conveyed by Governor Gavin Newsom’s office at the time.
(Reporting by Akash Sriram in Bengaluru; Editing by Shilpi Majumdar)
