Why Tesla's sales are slipping in California, and what it means for Elon Musk's car company

• Tesla's falling California sales point to bigger problems for the car company.
• Changes to the EV market are finally catching up to Tesla.
• Some customers and investors are losing patience with Musk's political antics.

Tesla is losing some ground in its home state of California, signaling more trouble ahead for the world's largest electric car company.

As electric car sales rose 2% in California, Tesla's sales in the state fell 3.5%, according to third-quarter figures from the California New Car Dealers Association. That's not an anomaly. It's the third straight quarter of Tesla sales declines in the largest EV market in the US.

The losses don't upset Tesla's market dominance: the Elon Musk-led company still accounted for more than half of all EV sales in California for the quarter. Through September 30, Tesla's EV market share in California declined from 64% to 55% year-over-year — still nearly five times that of Hyundai (5.6%) and BMW (5%) combined.

The trend in California underscores Tesla's challenges as the EV market matures and new competition makes it harder for the company's aging lineup to entice new buyers.

In addition to these economic challenges, Musk's political views have shifted further right, with the CEO endorsing and campaigning for Republican presidential candidate Donald Trump in the 2024 election.

That can impact sales in a solidly blue state like California. Actor Jason Bateman recently said he isn't driving a Tesla anymore because of Musk's connection to Trump.

"I got rid of my Tesla," Bateman told vice presidential candidate Tim Walz on an episode of his podcast Smartless, which he hosts with Sean Hayes and Will Arnett. "I feel like I'm driving around a Trump sticker with that car, so it's gone."

The EV market is maturing

EV demand in the US has been slowing for about a year. It took longer for that slowdown to hit Tesla than other competitors, but it's clear now that Musk is feeling the pinch as its once-reliable buyer base of wealthy early adopters is replaced by a more practical and frugal green-car shopper.

Previous tactics like slashing prices and offering dealership-like incentives to buy Teslas over other EVs aren't working as well as they used to. Following two quarters of slipping sales, Tesla's share of the US electric car market dipped below 50% for the first time at the end of the second quarter, according to data from Cox Automotive.

The automotive retail firm attributed much of Tesla's waning dominance to an influx of new competition, which offered EV shoppers more choices. This increase in choices is especially threatening for Tesla, which does not regularly update the looks of its electric cars — a strategy industry experts have been warned for years could come back to bite the company.

An increase in demand for hybrid-electric vehicles has also been "detrimental" to Tesla and overall EV adoption, according to Musk. Many industry experts disagree, arguing that hybrids are a necessary bridge technology for EV adoption among later adopters.

Elon's politics turn off some customers

Musk is no stranger to controversy. The bombastic billionaire's rise over the past decade has been in part due to his willingness to thumb his nose at some social codes and government agencies.

But as Musk becomes a more permanent fixture in the US's far-right movement, some owners and potential customers have been having second thoughts about supporting Tesla. As Tesla owners take to social media to express their displeasure with Musk's political involvement, automotive industry experts say there could be real consequences for the CEO's "Dark MAGA" era.

Today's electric car shopper, who is often considering an EV for environmental reasons, is less willing to look past Musk's support for Trump and other conservative leaders, experts say.

Musk, for his part, has denied that his involvement in politics is impacting sales.

"Tesla's sales are actually doing great," he said during a recent X space. "We're hitting all-time highs."