Tesla Takes a Hit in California as Customers Retaliate Against Elon Musk’s Relocation to Texas

By: Georgia | Published: Apr 30, 2024

In the heart of California, a stronghold for Tesla enthusiasts, a significant shift is occurring. New car buyers are now thinking twice about joining Elon Musk’s $605 billion venture.

Once leading the pack, the Tesla Model 3 has fallen to third place, outpaced by the Toyota Camry and Honda Civic, according to the California New Car Dealers Association.

Toyota and Honda Surge Ahead

This quarter, Toyota clinched the title of California’s favorite car brand with a robust 9.3% rise in registrations. 

Close-up image of a Toyota vehicle's steering wheel focusing on the emblem, with a blurred dashboard background emphasizing the logo

Source: Christina Telep/Unsplash

Honda is also on the rise, boasting an impressive 18.6% increase. Tesla, on the other hand, has seen a decrease in registrations by 7.8%, continuing a downward trend from a 9.8% drop last quarter.


Tesla's Market Performance

Tesla is facing turbulent times when stability is most needed. The company and its CEO, Elon Musk, are under significant pressure to adopt more traditional executive behaviors and scale back Musk’s visible social media engagements. 

A Tesla Model 3 in motion on a curvy forest road during rainy weather, showcasing the vehicle's sleek design and dynamic handling

Source: Tesla/X

This quarter, Tesla witnessed its most substantial revenue decline since 2012, a steep 9% drop.

Leadership Turbulence Adds to Investor Woes

Questions about Tesla’s stability have arisen following the resignation of three top executives, including notable insider Drew Baglino, all within a fortnight. 

Two men standing and smiling next to a parked Tesla Cybertruck at an outdoor event

Source: baglino/X

This has unnerved investors, contributing to a drastic 55% decrease in net income this quarter.

Cooling Passion for Tesla in California

The CNCDA recently noted, “Californians’ love affair with electric vehicle giant Tesla may have peaked.” 

Interior view of a Tesla Model S showing the steering wheel and a large touchscreen dashboard, with a focus on the minimalistic, modern design

Source: Bram Van Oost/Unsplash

This observation points to evolving market dynamics in California and suggests that the appetite for Tesla could be waning.

A Halt in Tesla's Growth

Brian Maas, president of the CNCDA, stated, “The numbers don’t lie. They indicate that the incredible growth that Tesla had for years has now stopped or certainly slowed in the most recent report.” 

A delivery truck loaded with various Tesla vehicles including a Cybertruck and several other models, parked with a hilly landscape in the background

Source: Tesla/X

This signals a significant shift from the previously unstoppable growth of Tesla in the market.


Electric Vehicle Market Share Declines

The market share for battery electric vehicles in California has dipped slightly from 21.5% in 2023 to 20.9% this quarter. 

A black Tesla car plugged into a Supercharger station, highlighting the charging process with the car's headlights illuminated and reflections on its shiny surface

Source: Bram Van Oost/Unsplash

Maas mentioned that a mix of factors, including Tesla’s pricing and charging infrastructure issues, could be contributing to this market slowdown.


Intensifying Competition for Tesla

“Appealing to the mass market is a challenge Tesla faces,” Maas observed.

A white Tesla Model 3 being celebrated as it drives through a crowd of employees in a factory decorated with Tesla branding and festive lights

Source: Tesla/X

As competitors flood the market with a wide array of appealing vehicles, Tesla’s previous dominance in the EV landscape is being contested.


Political Controversies Impacting Tesla’s Appeal

The political stance of Elon Musk may be alienating some potential customers in California, Fortune notes.

Elon Musk, dressed in a dark suit and seated with crossed legs, looks contemplative while participating in a public interview against a dark curtain background

Source: Wikimedia Commons

According to market intelligence, there has been a marked decrease in consumer interest in Tesla, possibly linked to Musk’s divisive public statements.


Tesla Maintains Lead Despite Challenges

Even with a challenging quarter, Tesla remains a leader in California’s EV market. 

A Tesla Model 3 moving along a foggy road, highlighting its modern design and aerodynamics, with the bleak landscape enhancing the focus on the vehicle

Source: Michal Lauko/Unsplash

Its models, including the Model Y, Model 3, and Model X, still outsell rivals such as the Chevy Bolt and Volkswagen ID.4, despite a drop in overall market share for electric vehicles.


Rising Competition from European Automakers

The EV sector is seeing new contenders rise, with Mercedes and BMW posting sales increases of 3% and 2.4%, respectively, this quarter. 

A white Mercedes EQS on display in an indoor setting with people around, showcasing the sleek design and branding of Mercedes' electric vehicle lineup under bright lights

Source: Wikimedia Commons

This development marks a significant shift as these brands start to cut into the market share that Tesla once dominated.


Navigating the Future

These emerging trends suggest Tesla may need to reassess its strategy to stay at the forefront of the market. 

The modern facade of Tesla's headquarters in Palo Alto, featuring a large glass structure with the Tesla logo prominently displayed

Source: Tesla/X

With competitors quickly closing in, Tesla faces the challenge of innovating and adapting to maintain its lead in an increasingly competitive field.