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Fortune
America’s largest economy is falling out of love with Tesla—and it’s only going to get worse
By Amanda Gerut,
2024-07-19
Elon Musk, co-founder of Tesla and SpaceX and owner of X Holdings Corp., speaks at the Milken Institute's Global Conference at the Beverly Hilton Hotel,on May 6, 2024 in Beverly Hills, California.
This might be the end of a love affair that became unrequited. Elon Musk has been steadfast in bashing California and has pledged to move Tesla, SpaceX, and X to Texas. Californians, in turn, are turning their backs on Musk.
Teslasales in California dropped 24.1 % in the second quarter, the brand’s third straight quarterly decline in the state. Purchases dipped 7.8% in the first quarter of 2024 and 9.8% in the final quarter of last year. Year-to-date, Tesla sales in California are down 17% compared to last year, according to the latest analysis of new vehicle registrations published by the California New Car Dealers Association (CNCDA). Instead of a Tesla from Musk’s $793 billion electric vehicle empire, California car buyers are purchasing battery-electric vehicles (BEVs) from Toyota, Hyundai, and Ford. The analysis found Toyota BEV registrations have soared 108.1% so far this year, while Hyundai and Ford BEV registrations rose 65.7% and 26.4%, respectively.
Plenty of factors are at play in Tesla’s sales decline, Brian Maas, president of the CNCDA, told Fortune. The Tesla Model 3 and Model Y are substantially the same vehicles they were five years ago, and buyers interested in those cars might represent a finite share of the market—and they might already own a Tesla. Without new models to entice customers, buyers look elsewhere for new cars, he said. And while Tesla has dominated the EV market, the past several years have seen competitors creep in and erode the company’s share with lower costs, newer cars, and greater variety, he explained. Accordingly, the Hyundai Ioniq 5 is now the third best-selling EV in California this year, wresting control of third place from the Tesla Model X, the CNCDA analysis found.
Now, staunchly Blue California has learned about Musk’s reported $45 million a month donation to a pro-Trump Super PAC and his endorsement of the former president and Republican Party nominee. This might not bode well for already declining sales, and the Hyundai Ioniq’s rising popularity could be the first blush of a blue backlash.
“When there’s a shift in the brand, that’s always going to have an impact on consumer behavior,” said Maas.
To be sure, Tesla is still the car of choice in California. The top-selling car is the Tesla Model Y in the new-vehicle market of BEVs and plug-in hybrids. The second top-selling BEV and plug-in model is the Model 3. Yet, California has embraced BEVs in droves, while other car buyers haven’t been as enthusiastic. According to Experian, California’s BEV market share is 21.4%, while the overall U.S. market share of BEVs is 7.5%.
Without detailed research, it’s difficult to connect Musk’s political views with buying trends, in Maas’ view. It’s more likely that Tesla sales are sluggish because the cars haven’t been revised or refreshed in years and people invest in durability, features, safety, and affordability—not a CEO’s mindset.
“Mr. Musk’s political views could change tomorrow,” said Maas. “That being said, I assume the effect is not zero.”
Go to Texas Elon these Cali Socialists appreciate nothing you do !!!
Ramon Lopez
30d ago
Elon is playing politics, his move to Texas has to do with his support for the MAGA movement. He’s jeopardizing his business because if you lose the California market, no matter how much backwater Texas buys, it would not compensate for the business lost in CA.
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