California, Tesla’s biggest U.S. market since it began delivering electric vehicles in 2008, soured on the brand in the first quarter, with sales there dropping 15% amid stiffer competition and as protests at the company’s stores statewide amped up over CEO Elon Musk’s unpopular government-slashing DOGE efforts.
The Austin-based company that has been a top beneficiary of the Golden State’s environmentally conscious consumers and regulations sold 42,322 vehicles there this year through March, down from 49,875 in the same period last year, according to data released by the California New Car Dealers Association on Wednesday. The drop in volume cut its market share to 49.3% in the period, down from 55.5% a year ago. It was also the first time it’s been below 50% of overall EV sales in the state.
Tesla’s fall in California, like its overall U.S. sales in the quarter, went against a broader growth trend for battery-powered cars. Total EV sales in the state rose 7.3% to 96,416, according to the report. Big gainers included GM, which saw a 62% jump for Chevrolet-brand EVs, Hyundai and Honda, whose new Prologue was the third-best seller behind Tesla’s Model Y and 3. Last week, Cox Automotive said Tesla’s sales fell 8.6% nationwide even as U.S. sales jumped 11.4% in the quarter. Globally, the company saw a 13% drop in the year’s first three months.
The decline for Tesla coincides with Musk’s controversial decision to be a high-profile member of President Trump’s administration, taking a lead in efforts by the so-called Department of Government Efficiency (DOGE) to reduce federal spending with dramatic and blunt cuts to employees at a range of departments and the functional destruction of agencies like USAID, which has played a critical role providing food, medicine and lifesaving programs for developing countries since the 1960s. While the world’s wealthiest human had vowed that DOGE could eliminate $1 trillion in spending by next year, ostensibly to help offset the cost of tax cuts Trump wants to extend, he now estimates the effort will likely find $150 billion in savings at most.
Musk’s willingness to take such a politically partisan, polarizing role is not serving the Tesla brand well, particularly in Democratic-leaning California or even in the overall U.S. market. Caliber, an analytics firm that tracks how well brands are liked and trusted by consumers, found that Tesla’s reputation score has plunged by 32 points to 47 since its last survey. That’s far below Tesla’s previous brand score of 69 and the national average score for automakers of 59, according to Caliber.
Though EV sales grew in California and accounted for 20.8% of all new vehicles sold, down slightly from 21% a year ago but still nearly triple the national level, the pace of growth is slowing and isn’t likely to reach a mandated state target of 35% of new vehicles sold by 2026.
“Dealers sell what customers want to buy,” Robb Hernandez, chairman of the dealers association, said in a statement. “Although the manufacturers we represent are increasing EV sales in California, with the substantial decline in Tesla sales, EV market penetration is largely flat. This puts us well short of EV sales mandates that take effect this year.”
Tesla shares were down 5.8% in Nasdaq trading to $239.34 on Wednesday. They’re down over 41% this year. The company plans to release first-quarter financial results on April 22.