By Akash Sriram and Hyunjoo Jin
(Reuters) - Registrations of Tesla (NASDAQ:TSLA) vehicles in California dropped 10% in the last quarter of 2023, the first fall in more than three years in the state, which is one of the most important markets for the electric carmaker and considered a national trend setter.
A total of 47,592 Tesla vehicles were registered in California in the fourth quarter, compared with 52,782 a year earlier, according to data from California New Car Dealers Association.
The last time Tesla posted a year-on-year registration fall in California was the third quarter of 2020 during the COVID-19 pandemic. California accounts for about 10% of Tesla's global deliveries.
Globally, Tesla saw its sales hit another record in the fourth quarter after the company cut prices. CEO Elon Musk has blamed high interest rates for raising monthly payments and in turn hurting demand for his company's EVs, forcing Tesla to slash prices.
Analysts said Musk may have alienated many potential buyers with actions and comments, including his endorsement of antisemitic comments on X and his support of the Republican Party. He later said he is "far from being antisemitic."
"83% of Americans connect Musk with Tesla and that's a problem for Tesla considering that Musk’s reputation is much weaker than Tesla’s," Shahar Silbershatz, CEO of stakeholder intelligence firm Caliber, said, adding that it has seen a decline both in the reputation and the consideration rates for Tesla since Musk has acquired X, formerly Twitter, more than a year ago.
Tesla's price cuts also hit the value of Teslas out on the road, which may also dissuade some potential customers, especially since many Tesla owners are repeat buyers, Guidehouse Insights analyst Sam Abuelsamid said.
"The poor residuals have probably left a lot of owners underwater on existing loans," he said.
Ongoing layoffs at tech companies located in California also may have weighed on consumer sentiment, they said.
Competition is also growing from the likes of Chevrolet , Hyundai (OTC:HYMTF) , Mercedes-Benz (OTC:MBGAF) and BMW (ETR:BMWG) , which all increased their EV market share in California last year.
During the full year of 2023, Tesla increased vehicle sales by 24.6% but lost battery market share by 10.5 percentage points, to 60.5% of EVs registered in California. Its share of the overall California car and light vehicle market rose slightly to 13%.
Tesla's Model Y and Model 3 were the top selling light truck and sedan in California for the year, respectively, by wide margins.
Consumers in California have been gravitating towards less expensive hybrid vehicles, which can run on gasoline and electric power.
Market share of vehicles with that powertrain type in California jumped to 13.3% in the fourth quarter, compared with 8.7% a year earlier.
The market share of battery electric vehicles in the state also fell to 21.1% in the fourth quarter from 22.3% in the prior three month period.