Tesla may be seeing a notable drop in registrations in California, but it still sits firmly at the top of the market, with the Model Y continuing to outsell every vehicle in the state.
According to the California New Car Dealers Association (CNCDA), Tesla vehicle registrations dropped 24.3% in the first quarter of 2026, marking the steepest decline of any major automaker in the state . The slowdown comes at a time when California’s electric vehicle market—long a bellwether for EV adoption in North America—is also losing momentum.
According to the report, total zero-emission vehicle (ZEV) registrations fell more than 40% year-over-year, while overall new vehicle registrations in the state declined 8.9% . ZEV market share dropped to 13.7% in Q1, down sharply from 21.0% in 2025 and marking its lowest level since 2021 .
The CNCDA says several factors are driving the pullback. The expiration of the $7,500 federal EV tax credit in late 2025 removed a key incentive for buyers, while high interest rates, rising vehicle prices, and broader economic uncertainty have made consumers more hesitant to commit to big-ticket purchases. Tariffs and geopolitical risks are also adding pressure to the market, further dampening demand.
Tesla appears to be feeling the effects more acutely than some rivals. The company’s market share in California slipped from 9.2% to 7.7% year-over-year, even as it maintained a dominant position within the EV segment itself.
Despite the decline in registrations, the Tesla Model Y remains the best-selling vehicle of any kind in California by a wide margin, with 22,907 units registered in the first quarter. That puts it well ahead of popular internal combustion models like the Toyota Camry and Honda Civic, each with 14,905 and 12,806 registrations respectively.
Meanwhile, the Tesla Model 3 continues to lead its segment, outselling traditional luxury competitors such as the BMW 3-Series and Mercedes-Benz C-Class.
This contrast highlights Tesla’s unique position. While demand has softened, its core products still outperform nearly every competitor on the road.
You can read the full report below.
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