Tesla’s California Car Sales Plummet Over 20% in Q2 2025: 7th Consecutive Quarterly Drop
- Why Are Tesla’s California Sales Crashing?
- How Bad Is the Damage to California’s EV Segment?
- What’s Killing Demand? Musk’s Politics or Stale Products?
- The $10 Billion Credit Lifeline About to Vanish
- Protesters Target Tesla’s New Hollywood Diner
- Can Tesla Reverse the Slide?
- FAQs
Tesla’s California sales nosedived by more than 20% in Q2 2025, marking the seventh straight quarterly decline in its largest U.S. market. Despite a booming retro-themed diner attracting crowds, the EV giant faces mounting challenges—from buyer discomfort with Elon Musk’s political stance to the impending expiration of a $7,500 federal tax credit. Meanwhile, anti-Musk activists gear up for protests at Tesla’s new Hollywood diner. Here’s the full breakdown.
Why Are Tesla’s California Sales Crashing?
California, Tesla’s flagship U.S. market, saw registrations drop over 20% in Q2 2025—the seventh consecutive quarterly decline. Oddly, this slump contrasts with the state’s broader auto market growth, where overall new car sales expanded in H1 2025. Analysts point to Musk’s polarizing political activism as a key factor, particularly in liberal-leaning California, where the "Tesla Takedown" protest movement originated. Even an updated Model Y failed to revive demand, and the Cybertruck’s lukewarm sales (just 11,000 units annually) aren’t helping.
How Bad Is the Damage to California’s EV Segment?
Dealers warn Tesla’s freefall is dragging down the entire zero-emission sector. Battery-powered models accounted for just 18.2% of new registrations in Q2 2025, down from 22% a year earlier. "When Tesla sneezes, the EV market catches a cold," quipped one industry insider. The company’s upcoming earnings report (due post-market Wednesday) is expected to reveal a 13.5% global delivery drop—its second straight quarterly decline worldwide.
What’s Killing Demand? Musk’s Politics or Stale Products?
It’s both. Musk’s conservative turn has alienated progressive Californians, while Tesla’s aging lineup—no new models since the 2023 Cybertruck—is struggling. "You can’t sell decade-old designs forever," noted BTCC analyst David Lin. Compounding the pain: a $7,500 federal EV tax credit expires in September 2025. Tesla’s scrambling to offset this with free Supercharging transfers and FSD trials, but the clock’s ticking.
The $10 Billion Credit Lifeline About to Vanish
For over a decade, Tesla padded profits by selling regulatory credits to legacy automakers—generating $10B+ (a third of total earnings). These credits, which Musk credits with saving Tesla in 2019, expire September 30. Their Q1 2025 earnings leaned heavily on this dying revenue stream. President Trump’s "One Big Beautiful Bill" axed the program, sparking a public feud with Musk. "Criticizing TRUMP won’t fix Tesla," warned a Reuters analysis.
Protesters Target Tesla’s New Hollywood Diner
Activists from the "Tesla Takedown" campaign plan protests at Tesla’s retro diner in West Hollywood on July 26. Organizer Joel Lava told The Verge: "Musk celebrates his terror reign with a cheesy influencer hangout. We say hell no." Though protest numbers have dipped since spring, Lava expects "a big crowd" at Saturday’s rally. The diner—complete with Optimus popcorn robots and drive-in screens—opened July 21 to mixed reviews.
Can Tesla Reverse the Slide?
With fading credits, Musk’s baggage, and stale products, Tesla’s at a crossroads. Discounts haven’t moved the needle, and the Cybertruck remains niche. As one William Blair analyst put it: "Tesla’s riding a bicycle downhill—it’s working until it isn’t." The company now faces its toughest test since the 2019 "production hell."
FAQs
How much did Tesla’s California sales drop in Q2 2025?
Tesla’s California registrations fell over 20% year-over-year in Q2 2025.
When does Tesla’s federal tax credit expire?
The $7,500 EV manufacturing credit expires September 30, 2025.
What percentage of California’s new car market are EVs?
Just 18.2% in Q2 2025, down from 22% in 2024.
