Tesla vehicle registrations in California experienced a notable decline of 10% in the final quarter of 2023, marking the first decrease in over three years in the state. California, a pivotal market for the electric carmaker and often regarded as a trendsetter nationwide, saw a total of 47,592 Tesla vehicles registered in the fourth quarter, down from 52,782 in the corresponding period a year earlier, as per data from the California New Car Dealers Association.
This dip in registrations represents Tesla’s first year-on-year decline in California since the third quarter of 2020, amid the challenges posed by the COVID-19 pandemic. Notably, California contributes approximately 10% to Tesla’s global deliveries.
Despite this localized setback, Tesla achieved another sales record globally in the fourth quarter, following price reductions initiated by the company. CEO Elon Musk attributed the need for price cuts to high interest rates, which have resulted in elevated monthly payments, subsequently impacting demand for Tesla’s electric vehicles and necessitating price adjustments.
However, analysts suggest that Musk’s actions and statements, including controversial endorsements and political affiliations, may have deterred potential buyers. Shahar Silbershatz, CEO of stakeholder intelligence firm Caliber, noted a decline in Tesla’s reputation and consideration rates, attributing it to Musk’s involvement in contentious issues.
Additionally, Tesla’s price reductions have potentially diminished the value of existing Tesla vehicles on the road, dissuading some prospective customers, particularly among repeat buyers. Sam Abuelsamid, an analyst at Guidehouse Insights, pointed out that decreased residual values may have left numerous owners with outstanding loans in a financially unfavorable position.
Moreover, consumer sentiment may have been impacted by ongoing layoffs at tech companies based in California. Furthermore, intensified competition from major automakers such as Chevrolet, Hyundai, Mercedes-Benz, and BMW, which have augmented their market share in the electric vehicle (EV) segment in California, adds to Tesla’s challenges.
Despite the overall decline in Tesla’s battery market share in California by 10.5 percentage points to 60.5% in 2023, the company’s share of the total car and light vehicle market marginally increased to 13%. Notably, Tesla’s Model Y and Model 3 emerged as the top-selling light truck and sedan in California, respectively, by substantial margins.
Consumer preferences in California have also exhibited a shift towards more affordable hybrid vehicles, capable of running on both gasoline and electric power. Market share for vehicles with hybrid powertrains surged to 13.3% in the fourth quarter, up from 8.7% a year earlier. Concurrently, the market share of battery electric vehicles in the state declined to 21.1% in the fourth quarter, down from 22.3% in the preceding three-month period.
