Tesla is facing a tough stretch in California, with its new car registrations dropping for the seventh straight quarter. A recent report from the California New Car Dealers Association shows that Tesla registrations fell by 18.3% in the first half of 2025 compared to the same period last year. This decline also caused Tesla’s market share in the state to drop by nearly three points.
Experts suggest one reason for Tesla’s slump is its unique sales approach, which skips traditional dealerships. Without a strong dealer network for customer support, Tesla might be losing ground to other automakers. This drop has affected the wider market for zero-emission vehicles (ZEVs) in California. The ZEV market share has decreased from 22% last year to 19.5% so far this year.
Still, California remains way ahead of the rest of the country in electric and zero-emission cars. The state’s ZEV market makes up nearly 20% of total new vehicle registrations, while the national average sits at about 7.8%.
The report also highlights a rising interest in hybrid cars, which have seen registrations jump by 54% this year. Hybrids now account for just over 19% of all new vehicles registered in California, while traditional gas-powered cars still dominate with 57.5%.
Toyota holds the top spot in the state with 17.3% of the market, followed by Honda at 11%. Tesla ranks third with 8.8%, ahead of Ford and Chevrolet. Popular passenger cars include the Tesla Model 3, Toyota Camry, and Honda Civic. For light trucks, the Tesla Model Y leads, with Toyota’s RAV4 and Honda’s CR-V not far behind.
Despite Tesla’s recent challenges, the overall market is evolving, with more drivers choosing hybrids and electric options as California continues its push toward cleaner vehicles.