Industry data shows Tesla's electric vehicle (EV) registrations experienced a 12% drop in California during 2024 while the company faced its most critical test in the American market. The number of registrations decreased for Tesla because of high interest rates that have increased competition alongside its revised Model 3 sedan launch. The company's sales performance faced additional pressure because CEO Elon Musk invested time in political activities during the U.S. election period.  

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Tesla experiences declining fortunes in its core U.S. market of California. Tesla faces ongoing challenges in electric car market leadership because their electric vehicles showed their fifth straight quarter of reduced registrations according to data provided by the California New Car Dealers Association's report from January 31.  

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The California automotive market chose the Tesla Model Y crossover as its top-selling vehicle in 2024 despite the sales decrease. The Model Y delivered approximately 129,000 units during this period. The Model 3 sedan trailed distantly behind the top position by delivering about 53,000 units which marked a substantial 36% decrease from 2023 data shows Bloomberg News initially reported.  

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Tesla faces nationwide difficulties as Californian market performance demonstrates the company's first annual global delivery decrease. Rising borrowing expenses have affected Tesla alongside intensifying competition from EV manufacturers that include Chinese and European stakeholders.  

Reuters revealed in November that former U.S. President Donald Trump's transition team planned to erase the USD 7,500 federal tax credit for EV purchases through an extensive tax reform initiative. The proposed legislation could weaken electric vehicle market demand throughout the United States.  

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A new proposal seeks to establish state-level incentives for EV buyers within California. Governor Gavin Newsom’s office has expressed doubts that Tesla’s electric vehicles will meet the criteria for state-level tax incentives.  

As Tesla navigates an evolving market landscape, the company’s performance in California—historically a stronghold for EV adoption—will remain a key indicator of its future prospects in the U.S. market.