Tesla’s California Sales Plummet Over 20% in Q2 2025: 7th Straight Quarterly Decline Amid Political Backlash

• Why Are Tesla’s California Sales Crashing?
• Global Woes Compound Tesla’s Troubles
• The $10 Billion Credit Lifeline Dries Up
• Anti-Musk Activists Target Tesla Diner
• What’s Next for Tesla?
• FAQs

Tesla’s sales in California, the U.S. EV stronghold, nosedived by more than 20% in Q2 2025—marking the seventh consecutive quarterly drop. While the broader auto market in the state grew, Tesla’s slump dragged down the zero-emission segment, with battery-powered models accounting for just 18.2% of new registrations. Analysts point to CEO Elon Musk’s polarizing political stance, fading federal incentives, and a stale lineup as key culprits. Meanwhile, anti-Musk activists are gearing up for protests at Tesla’s new retro diner in West Hollywood. Here’s the full breakdown.

Why Are Tesla’s California Sales Crashing?

California, long Tesla’s golden goose, is now a headache. The company’s Q2 2025 deliveries in the state fell over 20% year-over-year, per dealer data. This isn’t a blip—it’s the seventh straight quarterly decline. Oddly, the overall new car market in California expanded during the same period, making Tesla’s underperformance even starker. The zero-emission segment, which Tesla once dominated, slumped to just 18.2% of new registrations (down from 22% in 2024). Dealers blame Musk’s divisive political activism, especially in a liberal bastion like California, where "Tesla Takedown" protests have gained traction.

Global Woes Compound Tesla’s Troubles

Globally, Tesla reported a 13.5% drop in Q2 deliveries—its second straight quarterly decline. The refreshed Model Y failed to spark demand, and the Cybertruck remains a niche product (just 11,000 units sold in 2025, per Cox Automotive). With no new models since the Cybertruck’s 2023 debut, Tesla’s lineup looks tired. "They’re running on fumes," quipped one analyst. The upcoming expiration of Tesla’s $7,500 federal EV tax credit in September adds another hurdle. To counter this, Tesla offered perks like free Supercharging and FSD transfers, but the band-aid solutions aren’t moving the needle.

The $10 Billion Credit Lifeline Dries Up

Here’s the kicker: Tesla’s regulatory credit scheme—where legacy automakers buy emissions offsets from EV makers—ends September 30. Over the past decade, this program funneled over $10 billion into Tesla’s coffers (about a third of its total profits). In Q1 2025 alone, credits were Tesla’s primary profit driver. Musk himself admitted these credits "kept Tesla afloat" and even staved off bankruptcy in 2019. But Trump’s "One Big Beautiful Bill" axed the EV mandate, slashed credits, and sparked a public feud with Musk. Analysts at William Blair warn: "The credit gravy train is over."

Anti-Musk Activists Target Tesla Diner

Meanwhile, Tesla’s retro-themed diner, "The Spot," opened in West Hollywood on July 21—complete with outdoor movie screens, Superchargers, and a popcorn-delivering Optimus robot. But not everyone’s celebrating. The "Tesla Takedown" campaign plans protests on July 26, branding the diner as Musk’s "reign of terror" monument. Organizer Joel Lava told: "Tesla funds fascism. Giving money to a $300 billion man destroys our country’s fabric." While protester numbers have dipped since spring, Lava expects a "big crowd" this weekend. "Musk isn’t popular here. Protesting him is low-hanging fruit," he added.