(Image Credit: IMAGN) This Tesla Model 3 sedan, owned by a Silicon Valley resident and rented out on peer-to-peer site Turo, represents the company's attempt to move electric vehicles into the mainstream market.
Los Angeles, California – Tesla’s grip on the California electric vehicle market is loosening, as new data shows registrations for the automaker’s vehicles fell 15.1% in the first quarter of 2025 — a sharp decline in the state most synonymous with EV adoption.
According to the California New Car Dealers Association (CNCDA), Tesla’s share of the state’s EV market dropped to 43.9% from 55.5% a year earlier. That marks a significant shift for a company that has long dominated electric vehicle sales in the Golden State. The steep decline comes amid growing political backlash against CEO Elon Musk, mounting competition from rival automakers, and customer hesitation over Tesla’s aging lineup.
The Model Y, Tesla’s best-selling vehicle, remained the top-selling EV in California but still saw a 30% drop in sales compared to the same period last year. Tesla attributed the decline in part to production disruptions as it retooled several factories to produce a refreshed version of the Model Y, resulting in weeks of halted output.
But analysts and industry groups say the decline goes beyond supply issues. “An aging product lineup and backlash against Musk’s political initiatives are likely key factors for the decline in Tesla BEV market share,” the CNCDA said in a statement. Musk’s controversial leadership role in President Trump’s Department of Government Efficiency has sparked protests nationwide, including across California, where demonstrators have criticized federal workforce cuts and international aid program rollbacks tied to Musk’s influence.
The downturn in California is particularly alarming for Tesla because the state represents a major portion of its U.S. business — nearly a third of its national sales, according to data from Cox Automotive and the CNCDA. This slump contributed to Tesla’s global sales dropping 13% in the first quarter to their lowest level in nearly three years. Meanwhile, rivals like Ford, Chevrolet, and Honda gained traction in California’s expanding zero-emission vehicle market, which grew 7.3% during the same period.
Tesla’s stock fell 5.2% following the report and is down nearly 50% from its December peak. Investors are now eyeing the company’s upcoming earnings report Tuesday, where analysts have slashed earnings expectations to $0.42 per share — down from $0.69 just three months ago.
The CNCDA also projected that overall new vehicle registrations in California will fall 2.3% in 2025, citing headwinds from evolving U.S. trade policies.
