Californians appear to be losing enthusiasm for Tesla

• Tesla registrations dropped again in California last quarter, according to a California Auto Outlook report.
• The report says Tesla saw a 7.8% dip in sales in the state while Rivian's increased by 87.1% and GMC shot up by 24,700%.

Californian drivers appear to be losing some enthusiasm for Tesla.

A California Auto Outlook report shows year-over-year Tesla registrations are down again in the state. The report, published on Monday by the California New Car Dealers Association, summarizes first-quarter vehicle registration figures statewide.

The report said Tesla saw a 7.8% dip in sales in California in the first quarter, down from 54,265 in the last quarter of 2023 to 50,025 in Q1. The drop follows last quarter's 9.8% decline.

Meanwhile, EV startup and Tesla competitor Rivian saw an 87.1% increase in California registrations, according to the report. Other brands also saw major increases in EV sales, according to the data, including Mercedes, which saw EV sales increase by about 125%.

Tesla's California market share also dropped to an estimated 11.6% while other brands shot up, with Toyota leading with 16.6% of the market in the state and Honda capturing 10.5%, the report said.

With Tesla's market share in the Golden State is shrinking, established car companies are making a comeback by introducing new electric and hybrid vehicles, according to the report.

This can be reflected in a 14% increase in BEV sales by traditional dealerships compared to last year, although direct sellers experienced a slight decline, the report said. Franchised dealerships also hold over two-thirds of the market share for alternative fuel vehicles, which the report said highlights consumer trust in local dealerships and traditional brands as the landscape evolves.

CNCDA Chairman and owner of multiple car dealerships said in a statement announcing the report that "the Tesla sales model is ineffective," and cited layoffs and general dissatisfaction with the brand's service. Tesla famously snubbed car dealerships and opted to sell directly to consumers.

Tesla is still the No. 1 EV seller in California

But while Tesla sales in California may have dipped, it remains a top seller for EVs in California, according to the report.

Tesla dominated 2024 rankings for fully electric vehicles and plug-in hybrids for 2024, with the Model Y, Model 3, and Model X holding the top three spots out of 15.

Tesla also ranked first for top-selling luxury high-end sports cars, near luxury cars, luxury compact SUVs, and top-selling light trucks. Tesla came in second for luxury mid-size SUVs and went from first ranked to third for top-selling passenger cars.

Tesla's Model 3 may have remained in the top three rank for top-selling passenger cars, but CNCDA president Brian Maas told BI the downgrade is significant.

Maas, who acknowledged that sales fluctuate quarter to quarter, said that Tesla has previously seen continued growth in California — and the drop in registrations, market share, and passenger car ranking is indicative that the company is plateauing and "dwindling" in the state.

"What you're seeing overall is there are more and more choices for electric vehicles," Maas said. "And that competition is eating into Tesla's numbers."