Tesla Has a California Problem. Its Stock Is Dropping

Tesla’s growth in California has shifted into reverse. That isn’t great news but it does mean that the electric-vehicle maker has been doing better in other parts of the country.

It’s a silver lining for the EV giant.

The California New Car Dealers Association on Thursday released its second-quarter report. In the state, Tesla sold about 52,000 vehicles, down 24% year over year. For comparison, Tesla’s total U.S. sales fell about 6% in the second quarter. Global sales fell about 5%.

Overall, battery-electric vehicle, or BEV, sales totaled about 101,000 units in the state, roughly flat year over year. Tesla’s second-quarter market share came in at about 51%, down almost 16 percentage points year over year.

The state was weak for the EV giant. The California data, however, mean that Tesla sold about 112,000 BEVs to other Americans, outside of California, in the second quarter, up about 5% from the first quarter and up about 24% year over year.

Ultimately, total sales matter most for any auto maker but it’s a nice sign that more non-Californians are buying EVs.

The EV industry already has California. BEVs represented about 22% of all new Californian car sales in the second quarter, flat year over year. The penetration number for the entire U.S. was about 8%.

California accounts for roughly 11% to 12% of all new U.S. car sales.

Looking at second-quarter sales data from various sources, Tesla showed year-over-year declines in the U.S., China, Europe, and California. In the U.S., there was growth outside of California. Tesla also sold about 56,000 cars outside of the three key geographies—America, China, and Europe. That represents a 32% gain year over year.

There are pockets of growth for Tesla. The company still needs to boost sales around the world. Wall Street expects roughly 1.8 million car sales for 2024, flat with 2023. The expectation for 2025 is 2.1 million, according to FactSet.

Tesla stock was down 2.8% in early trading Friday, while the S&P 500 was little changed, and the Dow Jones Industrial Average had dipped 0.5%.

It’s been a wild week of trading for many stocks. Coming into Friday trading, the Nasdaq Composite was down almost 3%. Tesla stock had eked out a 0.4% gain.