Tesla’s California Sales Slump Continues Amid Broader Market Expansion

Tesla's car sales in California plummeted over 20% in Q2 2025, marking the seventh consecutive quarterly decline in the nation's largest EV market. The downturn persists despite overall growth in California's new car registrations during the first half of the year.

The electric vehicle pioneer's struggles are dragging down the state's zero-emission segment, with battery-powered models accounting for just 18.2% of new registrations—a significant drop from 22% year-over-year. Market observers point to CEO Elon Musk's polarizing political activism as a potential factor, particularly in the liberal-leaning state where the Tesla Takedown protest movement originated.

Globally, Tesla reported a 13.5% delivery decline in early July, its second straight quarterly decrease worldwide. The recent Model Y refresh failed to reignite demand, while the Cybertruck—Tesla's last new model since its 2023 debut—has moved just 11,000 units this year according to Cox Automotive.

An additional challenge looms in September when federal EV tax credits expire, eliminating a $7,500 incentive for domestic manufacturers. Tesla has attempted to counter the sales slide with various buyer incentives, though their effectiveness remains uncertain as the company prepares to release Q2 earnings.