Industry reports indicate Tesla (TSLA) sales fell by 21% in California—the largest electric vehicle market in the U.S.—and this downturn is dragging down the entire EV sector.
Accounting for roughly one-third of all U.S. EV sales, California remains the nation’s most critical EV battleground. Though Tesla has long dominated this market, its share has noticeably eroded since 2024.
Steep Decline Continues
According to the latest Q2 2025 report from the California New Car Dealers Association (CNCDA), Tesla’s quarterly deliveries plunged 21%. The automaker delivered 41,138 EVs in California during Q2 2025, down from 52,000 units in the same period last year. This marks:
- 7 consecutive quarters of year-over-year decline
- 4 consecutive quarters of quarter-over-quarter decline
Ripple Effect on the EV Market
CNCDA states Tesla’s underperformance is hampering California’s overall zero-emission vehicle (ZEV) adoption. The state’s ZEV share dropped to 18.2% this quarter and 19.5% year-to-date, down from 22.0% in 2024.
Competitors Gain Ground
Where Tesla struggles, CEO Elon Musk often blames broader market conditions—but this argument falls flat in California. Most other brands have seen significant growth year-to-date, including luxury rivals BMW, Mercedes-Benz, Cadillac, Genesis, and Acura, which compete directly with Tesla.
Legal Woes Compound Challenges
The sales slump may only be the beginning of Tesla’s troubles. The automaker is currently battling California’s DMV in court over allegations of false advertising regarding its Autopilot and Full Self-Driving (FSD) capabilities.
The state has even sued to suspend Tesla’s dealer license in California—a move that would force the automaker to halt sales in America’s top EV market.
Musk’s Optimistic Spin
Despite bleak market data and legal headwinds, Musk remains characteristically upbeat, responding: “No worries—full autonomy is coming soon.”