(Reuters) – Tesla Inc. (NASDAQ:) vehicle registrations in California fell for a third straight quarter in the April-June period, pointing to growing challenges facing the electric car maker, according to a report from the California New Car Dealers Association on Thursday.
High interest rates and intense competition have reduced demand for electric vehicles as consumers opt for less expensive hybrids.
Potential Tesla customers in the United States are shunning its electric cars, in part because of CEO Elon Musk’s controversial personality.
Musk’s embrace of Republicans and controversial comments have raised concerns about Tesla’s brand, especially in liberal states like California, which accounts for 10% of the company’s global deliveries.
The world’s richest man has publicly endorsed former President Donald Trump for the first time in the US presidential race after the Republican candidate was assassinated on Saturday.
The electric carmaker’s Model Y crossover remains the state’s best-selling model, but its market share in the first half of the year fell to 53.4%, from 64.6% in the same period last year.
Tesla registrations in the state fell about 24% in the second quarter.
Its share of California’s electric vehicle market fell to 51.5% in the second quarter from a year ago, according to Reuters calculations based on the data.
From January to June, Tesla saw its California registrations drop 17%, even as distant rivals like Hyundai Motor (OTC:), Kia Motors, BMW (ETR:), Mercedes-Benz (OTC:), Ford (NYSE:), and Rivian (NASDAQ:) increased by double-digit percentages.
“Tesla’s appeal appears to be fading, signaling potential problems for the consumer-facing manufacturer,” the report said.
Meanwhile, hybrids’ market share rose to 13.4% in the three months to June, up from 10.8% a year earlier. Battery-electric vehicles captured 21.9% of the market, slightly higher than 21.8% a year earlier.
Tesla, which is scheduled to report quarterly results on Tuesday, delivered more vehicles to customers in the second quarter than analysts had expected, though deliveries were lower than a year ago.