Tesla, once the leading electric vehicle (EV) manufacturer in California, is witnessing a notable downturn in sales within the state. This decline could have far-reaching implications for the company, especially considering California's pivotal role in the U.S. EV market. The state accounts for nearly 35% of all EV sales nationwide. Additionally, Tesla has experienced global setbacks, particularly in Europe, where its market share has plummeted due to various factors including political controversies surrounding CEO Elon Musk.

Despite these challenges, the overall EV market in California continues to grow, indicating that Tesla's issues are specific to its brand rather than the broader industry. In Europe, Tesla's decline comes amid rising competition and consumer backlash against Musk's political stances. The company's recent price hikes on its Model X models may further impact its competitiveness in an increasingly saturated market.

Tesla's Declining Market Share in California

The Golden State remains a critical battleground for electric vehicles, and Tesla's performance here is crucial. According to data from the California New Car Dealers Association (CNCDA), Tesla's sales have fallen by double digits, with nearly 27,000 fewer deliveries in 2024 compared to the previous year. This represents an 11.6% drop in sales, marking the fifth consecutive quarter of decline for the company. Despite this, Tesla still holds the largest market share in California's EV sector, albeit reduced from 60% to 52%.

Several factors contribute to this decline. First, the executive order signed by President Trump last month, which repealed federal rules promoting EVs, could potentially hinder Tesla's growth. Second, increased competition from other EV manufacturers has diluted Tesla's dominance. While Tesla's sales have dipped, the overall EV market in California grew by 1.2% in 2024, and excluding Tesla, it saw a 20% increase. This suggests that consumers are shifting towards alternative brands. Tesla's response to these challenges will be vital in determining whether it can regain its footing in this essential market.

Global Struggles: Tesla's European Market Woes

Beyond California, Tesla faces significant hurdles in the European market. Sales have plummeted across several key countries, with Germany, France, Norway, and the U.K. all reporting substantial declines. In Germany, Tesla registered only 1,277 new cars in January, a 59% decrease compared to the same period in 2023. This occurred despite a 50% year-over-year growth in Germany's EV market, reducing Tesla's market share from 14% to 4%. Similar trends are evident in other European nations, underscoring the breadth of Tesla's struggles.

Elon Musk's controversial political stances have played a significant role in this downturn. His vocal support for right-wing parties and his acquisition of Twitter have sparked public outcry, leading some consumers to boycott Tesla products. In Germany, an entrepreneur reported receiving over 2,000 orders for stickers protesting Musk's leadership. Moreover, Tesla's decision to raise prices on its Model X models in the U.S. may exacerbate these issues. With no clear explanation provided for the price hikes, potential buyers may look elsewhere. The future of Tesla's sales in both California and Europe remains uncertain, but addressing these challenges will be crucial for the company's long-term success.