Tesla’s California Car Sales Plunge 20% in Q2 2025—What’s Driving the Drop?

Elon's golden state slump hits hard.

California—long Tesla's electric crown jewel—just saw Q2 sales skid off a cliff. A 20% nosedive in deliveries raises eyebrows as legacy automakers claw back market share with cheaper EVs.

Wall Street shrugs (again). While retail investors panic-sell TSLA shares, hedge funds quietly load up on puts—because nothing screams 'innovation' like betting against your own hype.

Tesla’s federal tax credit set to expire

The removal of a $7,500 federal incentive for domestically manufactured EVs in September poses another hurdle.

Tesla introduced perks such as complimentary supercharging for Model 3 buyers and gratis Full Self‑Driving feature transfers to boost purchases before the incentive expires.

Even with intermittent gains in its share value, Tesla faces mounting global challenges, and a vital source of income is on the verge of disappearing. The regulatory credit scheme, which enables conventional auto manufacturers to purchase emissions offsets from EV producers, ends on September 30.

Over the past ten years, this arrangement has generated over $10 billion in revenue for Tesla, roughly a third of its total profit, and it was the primary contributor to Tesla’s earnings in Q1 2025.

Musk says those credits kept Tesla afloat and even stopped it from going bankrupt in 2019.

However, President Trump’s recent “One Big Beautiful Bill” removed the EV mandate, backed more consumer options, cut the credit program, and ignited a public feud with Musk.

William Blair analysts have questioned the longevity of this credit‑driven boon.

Reuters has cautioned that criticizing TRUMP alone won’t save Tesla, and the automaker’s recent discounts and promotions have yet to generate noticeable gains.

Tesla officially launched its retro-themed diner in West Hollywood on July 21. The spot offers large outdoor screens for drive‑in movies, dozens of Supercharger stations, and an Optimus robot that hands out popcorn.

Anti-Musk activists plan July 26 protest at Tesla diner

Activists from the Tesla Takedown campaign plan to rally outside on July 26 to voice their opposition.

Action Network, which helps coordinate the protests, describes Musk’s new venue as evidence of “[Elon Musk] wants to celebrate his reign of terror in OUR CITY, Occupied Los Angeles, with a cheesy Tesla‑branded diner exclusively for his legion of conmen stock‑pumpers and MLM influencer tryhards?” and closes with “WE SAY HELL NO.”

Organiser Joel Lava told The Verge that the movement remains active despite a dip since spring and expects “a large crowd” outside the diner this Saturday.

“I think it’s SAFE to say that Elon Musk is not a popular figure in West Hollywood. So I don’t think it’s going to be hard to protest it,” he told The Verge.

Each week, about two dozen people still gather at Tesla sites in Los Angeles, rallied by news of falling sales, a weak earnings report, and reports that Doge cuts left USAID food to spoil in storage. Rumours of a Musk political party have spurred protesters.

“Yes, our numbers have dwindled, but they have stayed strong,” Lava said. “Tesla funds fascism. By giving money to a $300 billion man, you help destroy the fabric of our country. That’s why you shouldn’t go into this cafe.”

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