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Registrations of Tesla cars in California fell by 24% from April to June, marking the third consecutive quarter of sales decline in this crucial market for the electric vehicle (EV) maker.
According to industry data released on Thursday, Tesla is facing mounting challenges. High interest rates and increased competition have softened demand for electric vehicles, and consumers are increasingly opting for less expensive hybrid cars.
Impact of CEO Elon Musk’s Persona:
Potential Tesla customers in the United States have shown reluctance to buy its electric cars, partly due to CEO Elon Musk’s polarizing persona.
Musk’s public endorsement of Republicans and outspoken comments have raised concerns about Tesla’s brand, particularly in liberal states like California, which accounts for 10% of the company’s global deliveries.
Recently, Musk publicly endorsed former President Donald Trump for the first time following an assassination attempt on the Republican candidate.
California Market Performance:
The California New Car Dealers Association reported that Tesla’s California registrations fell to 52,211 vehicles in the second quarter.
The state’s battery electric vehicle market slipped by only 1.3% during the same period, while sales of hybrid vehicles surged by 22%.
The report highlighted, “Tesla’s allure seems to be wearing off, signaling potential trouble for the direct-to-consumer manufacturer.”
Comparison with Rivals:
From January to June, Tesla saw a 17% slump in its California registrations. In contrast, rivals such as Hyundai Motor, Kia Motors, BMW, Mercedes-Benz, Ford, and Rivian increased their sales by double-digit percentage points.
Despite these challenges, Tesla’s Model Y crossover remains the best-selling model in the state. However, its market share in the first half of the year fell to 53.4%, down from 64.6% in the same period last year.
Headquarters Relocation and Future Outlook:
In 2021, Tesla moved its headquarters from California to Texas. This week, Musk announced that his other companies, such as SpaceX and X, would follow suit due to his disagreement with Governor Gavin Newsom’s approval of a bill on transgender kids.
Tesla is set to report its quarterly results on Tuesday. The company handed over more vehicles to customers in the second quarter than analysts had expected, although deliveries were lower than a year ago.
