Tesla (TSLA) sales are down 21% in biggest US EV market, dragging whole market down

Tesla (TSLA) sales are down 21% in California, the largest EV market in the US, and this decline is dragging the entire EV market down.

California accounts for roughly a third of EV sales in the US, making it the most significant electric vehicle market in America.

Tesla has dominated the EV market in California, but its market share has been in clear decline since 2024.

Today, the California New Car Dealers Association (CNCDA) released its Q2 2025 report and confirmed that Tesla’s sales fell 21% during the quarter.

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Tesla delivered 41,138 electric vehicles in California in Q2 2025 – down from 52,000 units during the same period last year.

It has now been 7 quarters in a row of year-over-year decline and 4 quarters in a row of quarter-to-quarter decline:

CNCDA said that Tesla’s performance is pulling the entire EV market down in California:

Seven appears unlucky for Tesla, as this is the most recent number of quarterly registration declines reported in the state. The electric-only automaker experienced an 18.3 percent drop in registrations compared to the first half of 2024. The direct-to-consumer automaker lacks a robust dealership network for sales support, which may have contributed to a 2.7 point decline in its market share year-to-date, with Q2 alone seeing a 2.9 point decrease. This decline pulled down the overall Zero Emission Vehicle (ZEV) share in the state, which fell to 18.2 percent this quarter and 19.5 percent year-to-date, down from 22.0 percent in 2024.

Wherever Tesla is underperforming, CEO Elon Musk likes to claim that it’s the whole market that is underperforming, but he can’t claim that in California, as most other brands are seeing significant growth in California year-to-date:

This includes luxury brands such as BMW, Mercedes, Cadillac, Genesis, and Acura, which directly compete with Tesla.

Tesla’s troubles in California might be only starting as the automaker is currently in court in California fighting the state’s DMV, which is suing the company for false advertising of its Autopilot and Full Self-Driving features.

The state is even suing to suspend Tesla’s dealer license in California, which would force the automaker to stop selling cars in the biggest EV market in the US.

Electrek’s Take

For Tesla’s sales report in Q2 to make sense, Tesla needed to increase quarter-to-quarter deliveries in the US.

We still don’t have the data on that yet, but we do for its biggest market in the US: California.

In California, Tesla delivered approximately 1,000 fewer vehicles in Q2 compared to Q1, despite the availability of the new Model Y.

Every hard data that we get about Tesla’s sales and demand is terrible lately and the CEO’s answer to this clear trend is that “it doesn’t matter because autonomy is around the corner.”

Considering he has been wrong about Tesla solving autonomy for the last decade, and Tesla has launched a “Robotaxi” service with a safety supervisor in the car, à la Waymo circa 2020, it’s hard to take him seriously.