Tesla’s California EV registrations drop 12% in challenging market

Published 03/02/2025, 20:40
© Reuters

Investing.com -- Tesla (NASDAQ:TSLA)’s electric vehicle (EV) registrations in California saw a decrease of approximately 12% last year, indicating growing difficulties for the car manufacturer in this crucial U.S. market. Factors such as high interest rates, stiff competition, and the launch of a redesigned Model 3 sedan have reportedly impacted Tesla’s sales in the state. The company’s situation was possibly further complicated by CEO Elon Musk’s involvement in the U.S. election.

The California New Car Dealers Association, in its report released on Jan. 31, stated that Tesla’s stronghold in the EV market is slipping, as evidenced by its fifth consecutive quarterly registration decline. Despite these setbacks, Tesla’s Model Y crossover remained the best-selling vehicle in California, with nearly 129,000 units sold last year. The Model 3 sedan trailed behind, with roughly 53,000 cars delivered.

The Model 3 sales experienced a decline of around 36% compared to the previous year, according to industry data initially reported by Bloomberg News. Tesla’s global deliveries also saw a drop for the first time last year, burdened by high borrowing costs and competition from Chinese and European car makers.

In November, it was reported that the transition team of Donald Trump was considering the elimination of the $7,500 consumer tax credit for EV purchases as part of a wider tax reform legislation. If this federal tax credit is removed, California may introduce state tax credits under a new proposal. However, Tesla’s EVs likely would not qualify for these incentives, according to a statement from Governor Gavin Newsom’s office.

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