In the first quarter of 2026, Tesla’s vehicle registrations in California dropped by almost 25%, with sales falling by over 10,000 units compared to the same timeframe in 2025. Notably, the overall EV market in California has seen a significant downturn, with registrations down 40% and reaching lows not observed since 2021.
Tesla’s registration count stood at 31,958 for the quarter, which is a decline of 10,253 from 42,211 the previous year, as reported by the California New Car Dealers Association in its 2026 Q1 Automotive Outlook Report. This marks a reduction of 24.3% year-over-year. It’s interesting to note that even the previous year’s figures were considered weak, largely due to production issues when switching to the Model Y, resulting in a 15% sales drop then.
During this same period, Tesla’s market share in California decreased from 9.2% to 7.7%. Nevertheless, the Model Y still led the state’s light SUV segment, securing 22,907 registrations and a 53.3% share of the luxury compact SUV category. That said, it’s a significant drop from the year before. The Model 3 contributed an additional 5,688 units to Tesla’s total for the quarter.
The broader EV market in California faced an even steeper decline, with total registrations plunging 40.2% from 95,520 in Q1 2025 to just 57,111 in Q1 2026. The state’s EV market share fell from around 21% in 2025 to 13.7%, marking the lowest level since late 2021 and essentially wiping out years of growth in this sector.
Almost every electric vehicle manufacturer present in California experienced declines. For example, Mercedes-Benz saw an 81.9% drop in EV registrations, while Chevrolet was down 59.6%. Sales for BMW and Ford fell by about 59% each, and Kia’s registrations dropped 48.2%. Even Rivian and Hyundai, which has been expanding its EV offerings, faced declines of 35.9% and 30.4%, respectively.
On the other hand, hybrid vehicles have quickly captured 20.9% of the market, surpassing electric vehicles for the first time in a while. Traditional gasoline vehicles have also recovered well, increasing their share of registrations from 54% to 61.1% in 2025.
Analysts suggest that the expiration of the $7,500 federal electric vehicle tax credit on September 30, 2025, has significantly contributed to the downturn in the market. This change led to a nationwide 28% drop in new electric vehicle sales in the first quarter of 2026. California, accounting for nearly 30% of U.S. zero-emission vehicle registrations, has been particularly hard hit by this change in policy.
It was reported that Elon Musk had expressed strong opposition to a 2025 bill that aimed to reduce the EV tax credit, calling for action to prevent its passage. His frustration appears to stem from concerns that the loss of these incentives would undermine electric vehicle sales.
