Electric vehicle giant Tesla has just recorded another sales decline in California for the third consecutive quarter in Q2 2024.
Tesla sales slowdown in California
Tesla’s electric vehicle registrations in the Californian market dropped by an astounding 24% to 52,211 units in the second quarter of the year, Reuters reported, citing California New Car Dealers Association’s data on Thursday.
This disappointing result marks the third consecutive quarter in which Tesla suffered from a decline in EV registrations in its key market.
“Tesla’s allure seems to be wearing off, signaling potential trouble for the direct-to-consumer manufacturer.”
California New Car Dealers Association
In the first half of the year, Tesla’s EV registrations dropped 17%. In comparison, its distant challengers like Hyundai, Kia, BMW, Mercedes-Benz, Ford, and Rivian managed to boost their sales by double-digit percentage points.
While the Tesla Model Y remains the most popular model in California, its market share continues to drop from 64.6% in H1 2023 to 53.4% in the same this year.
Affecting factors
The report cited various factors affecting Tesla’s electric vehicle registrations to continuously drop through Q2 2024, including “high interest rates and stiff competition.”
These two factors apparently influence EV demand as customers start to favor lower-cost hybrid electric vehicles (HEVs) than expensive battery-electric vehicles (BEVs).
For reference, the local BEV market slightly dropped by 1.3% in the same period. Meanwhile, HEV sales increased by a notable 22%.
In addition, Tesla CEO Elon Musk’s “polarizing” personality reportedly discourages prospective buyers from buying the company’s electric car products. The Tesla boss’ support for Republicans and blunt comments have apparently stimulated major concerns about the electric automaker, particularly in liberal states like California.
Impact on Tesla
Tesla’s waning electric vehicle sales in California is a major hit in its business, considering that the market contributes 10% of its total global deliveries.
It signifies a loss of ground in a crucial market, potentially impacting Tesla’s overall US sales. This decline can enable aspiring Tesla rivals to gain a stronger foothold in the Golden State.
In addition, these disappointing results can also affect investor confidence in the brand. It could lead to a further decline in stock price.
However, it must also be noted that this decline could be temporary and might not reflect a long-term trend. While the sales slump is a major concern, the full impact will rely on how Tesla reacts and adjusts its strategies.
Tesla’s EV deliveries in Q2 2024 beat analysts’ expectations. However, these results remain notably lower compared to the same period last year. The Musk-led company will release its quarterly results on Tuesday.
