Batteries that were once a source of great love between Tesla CEO Elon Musk and California car buyers are slowly fading away.
New registrations of the Tesla Model Y in the Golden State have plummeted for the full year, with its market share down 8.5% compared to last year, according to Experian Automotive data. The California New Car Dealers Association’s third-quarter outlook report published on Friday revealed electric vehicle makers’ dominance in the nation’s largest battery-electric vehicle (BEV) market continues to erode. Among the top three passenger cars sold in California, the Tesla Model 3 dropped to third place, behind the Honda Civic and Toyota Camry, potentially opening the door for a full-throttle free-for-all automotive brand.
Overall, Tesla’s brand share fell from 13.6% to 12.1%, year-to-date. The outselling of non-luxury brands like Honda and Camry is a sign of a major shift in the overall competitive landscape. The Model 3 catapulted Tesla to center stage as a mass-market brand, but it now faces new competitors including Cadillac, Lexus, Hyundai and BMW, all of which made big gains last year. Cadillac, for example, saw a 315.2% increase in BEV registrations, while Tesla dropped from 63% to 54.5%.
There may also be increased tension in the market due to California’s strong Democratic-leaning population, which is more likely to buy electric vehicles, and Musk’s support of Trump. The CNCDA outlook report, which tracks trends in California’s new vehicle market, comes as electric vehicle CEOs continue to praise Republican Presidential nominee Donald Trump. The number of registered Democrats in California has increased to 45.3% since 2020, while the number of Republicans has remained flat at about 23.9%, according to the Public Policy Institute of California. Meanwhile, a 2020 study found that Democrats in the US were significantly more willing to adopt electric vehicles than Republicans. And California’s BEV market share to date is 22.2%, compared with an overall U.S. market share of 7.9%, CNCDA reported.
Plus, Musk hasn’t been kind to California. He has publicly promised to move SpaceX and X out of the state and into Texas this year. The latest straw comes after Gov. Gavin Newsom signed the Supporting Academic Futures and Educators for Today’s Youth (SAFETY) Act, which aims to ban forced-exit policies for students in schools. Musk said it was tantamount to an attack on his family and company.
It doesn’t hurt that Democratic Presidential nominee Kamala Harris is a California native. The Vice President lives in Washington, DC, but she and husband Doug Emhoff own a $5 million mansion in Brentwood, California.
Brian Maas, president of CNCDA, said Property There are likely several factors underlying this trend.
“We believe Tesla’s decline could occur for a number of reasons, starting with market saturation,” Maas said in a statement. “Californians who want and can afford a Tesla have largely done so.”
Plus, Tesla has yet to launch any new accessible models, aside from “a very special and expensive Cybertruck,” he added. There are now more options than traditional car manufacturers. “And this is all before we get to Musk’s political views and comments, which do not resonate with many Californians, especially his initial customer base of Bay Area drivers,” Maas said.
Tesla did not respond to a request for comment.
Why are Tesla shares soaring?
However, Tesla was still down this week, up 22%, after a blockbuster earnings call and report fueled its strongest performance since 2013. Part of the decline was due to Tesla’s report that its $80,000-apiece Cybertruck turned a profit for the first time. The rally saw Musk’s personal wealth soar another $34 billion, pushing his net worth to $270.3 billion in a single day.
And Musk has hinted that Tesla has more innovation in store. This month, Tesla announced a self-driving robotaxi, called the Cybercab, and a fully autonomous Robovan with enough space for a family. On Wednesday, Musk confirmed the robotaxi had made its maiden voyage under the auspices of Tesla employees on the streets of San Francisco. The world’s richest man said in an earnings report that other car companies would be in danger if they did not focus on autonomy, as Tesla does.
“A lot of auto companies or most auto companies haven’t internalized this, and it’s surprising, because we’ve been shouting about this for a long time, and this is going to hurt them in the future,” Musk said.
To be sure, the Tesla Model Y is still the best-selling car in California today, CNCDA reports. And, Tesla is the second best-selling brand in California after Toyota. Additionally, the Model Y competes in the red-hot SUV/crossover segment that dominates the market. The Model 3 competes in the shrinking passenger car segment, with sales down 13.1%, while SUVs rose 3.4%. The Model Y sold nearly three times the volume of the Model 3.
It remains to be seen whether this future could be jeopardized because of Musk’s political affiliations. His strong political stance goes against the grain compared to other famous CEOs. A representative for JPMorgan Chase CEO Jamie Dimon, for example, this month issued a denial that Dimon supports Trump.
Overall, the trend persisted for most of this election season. But workplace political talk is likely to intensify in the next few weeks as votes trickle in and employees head to the polls in November.
Kate Duchene, CEO of global professional services company RGP, said Property that since the pandemic, people are increasingly blending their personal and professional worlds, so more conversations are probably inevitable.
“For any company, keeping political conversations completely outside of work is becoming increasingly challenging,” said Duchene, who consults with 70% of Fortune 500 companies. “Businesses and managers need to recognize that conversations like these are likely to occur, especially in the coming weeks . In political discussions, diversity of opinion should be accepted in the workplace, as long as all parties keep the discussion professional and respectful.”