Fresh metal
“In the most dense EV counties in California, the market is shifting away from Tesla to other brands,” said Tom Libby, an analyst at S&P Global Mobility. “There’s much, much greater competition and it’s coming from many brands in many segments with new models. Tesla is facing much greater competition at all levels.”
Tesla’s volume models—the Model 3 sedan and Model Y crossover—are badly in need of redesigns, Libby said. The Model 3 launched in 2017 and Model Y in 2020. Although they have undergone internal changes, they look the same in a market hungry for fresh metal. Tesla’s newest vehicle, the $100,000 Cybertruck, is recent but has limited appeal because of its wild styling.
Tesla still has the highest brand loyalty in the U.S. at around 70%, Libby said, which is an advantage, but car buyers looking at an EV for the first time are finding better options at similar price points.
In addition to Tesla’s product problem, it faces a serious image problem as Musk antagonizes large swaths of Northern California’s politically liberal population.
“The general rule for anybody who reads a business section is you don’t want to do anything to upset a huge percentage of your customer base, and Musk is ripping up the rule book and throwing it in the garbage,” said Brian Maas, president of the California New Car Dealers Association.
Musk endorsed Republican Donald Trump for president in July. In September, Musk directed an X post at pop superstar Taylor Swift, saying cryptically, “I will give you a child and guard your cats,” after she endorsed Democratic candidate Kamala Harris. On X, #ElonIsCreepy became a trending topic despite Musk suggesting the comment was a joke.
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Musk sometimes posts on X dozens of times a day, promoting what his critics call conspiracy theories. Musk says he’s expressing his political beliefs, defending free speech and engaging in humor on the platform he bought in 2022.
“I can’t think of anyone that is not only this controversial but is purposely controversial,” Maas said of Musk.
“Five years ago, Tesla pretty much had the EV market to itself with a couple of minor exceptions,” Maas said. “Now, that bloom is off the rose. It’s an EV that has to compete with all these other EVs, and all these other EVs are newer. And on top of all that, you have Mr. Musk’s controversies and people are exhausted.”
In California as a whole, Tesla registrations fell 12% from January through July, according to S&P Global Mobility. In the U.S., Tesla registrations declined 8.5% in the first seven months of the year, the data shows.
Tesla was still the top EV brand in California with 56% of the market, although that was a big drop from its 64% share in the year-earlier period, according to S&P Global Mobility.
Brands gaining on Tesla for EV registrations include Hyundai with 55% growth from January through July compared with a year earlier. Rivian had a 50% rise and Ford a 24% gain, S&P Global Mobility said. California’s total EV registrations reached 232,353 in the seven-month period.