Tesla Inc. TSLA experienced a 24% drop in car registrations in California during the second quarter, according to data from the California New Car Dealers Association. This marked the third consecutive quarter of declining sales in this critical market.
Tesla's registrations in California fell to 52,211 vehicles in the second quarter, while the battery electric vehicle market only declined by 1.3% during this period, hybrid vehicle sales surged by 22% in California.
The Model Y crossover remains Tesla's top-selling model in California, although its market share dropped to 53.4% in the first half of the year, down from 64.6% in the same period last year.
High interest rates and increased competition have led to a decline in demand for electric vehicles as consumers turn towards more affordable hybrid options.
Reuters reported that Potential Tesla buyers in the U.S. are reportedly deterred by CEO Elon Musk's divisive public persona.
Musk's endorsement of Republican candidates and controversial statements have raised concerns about Tesla's brand, particularly in liberal states like California, which accounts for 10% of the company's global deliveries.
Also Read: Tesla Extends Model 3 Delivery Times In China: Report
"Tesla's allure seems to be wearing off, signaling potential trouble for the direct-to-consumer manufacturer," the report noted.
Tesla relocated its headquarters from California to Texas in 2021, and Musk announced this week that other ventures like SpaceX and X would also move, following disagreements with Governor Gavin Newsom's policies on transgender issues.
From January to June, Tesla's registrations in California decreased by 17%. Meanwhile, competitors like Hyundai Motor Company HYMTF, Kia Corp KIMTF, BMW BMWYY, Mercedes-Benz Group MBGYY, Ford Motor Co F, and Rivian Automotive Inc RIVN saw significant sales increases.
Tesla is set to release its quarterly results on Tuesday, July 23. The company delivered more vehicles than analysts anticipated in the second quarter, though these figures were still lower compared to the previous year.
Tesla reported second-quarter deliveries of 443,956 compared to a Street consensus estimate of 437,800.
Tesla stock has lost more than 14% in the last 12 months. Investors can gain stock exposure via the Consumer Discretionary Select Sector SPDR Fund XLY and the Fidelity MSCI Consumer Discretionary Index ETF FDIS.
Price Action: TSLA shares are trading higher by 0.24% at $249.82 in premarket at the last check on Friday.
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