For the second quarter in a row, new registrations of Tesla vehicles in California took a dip as the brand’s market share hits a low point.

The California New Car Dealers Association published its quarterly report of new car registrations across the state Tuesday, spanning the first quarter of 2026. Overall, new light vehicle registrations in 2026 are predicted to fall slightly after a post-pandemic rebound in the last three years.

Across the alternative energy vehicle market, hybrid vehicle registrations have roughly stabilized at around 20% of the market share over the last year. Full-battery electric vehicle registrations plummeted over the last two quarters.

Tesla struggles at the dealership

Tesla experienced some of the biggest drops among California’s top-performing car manufacturers in year-over-year registrations, according to the association’s newest report.

Year-to-date registrations for Tesla vehicles from 2025 to 2026 tumbled by 24.3%, while the brand’s market share dropped to 7.7% in the first quarter of 2026.

The brand faced the fourth-largest drop of the major manufacturers and the third-largest drop among manufacturers selling hybrid and electric options. Only Rivian, Audi and Land Rover saw bigger dips.

Despite the marked drop in new registrations and market share, the Tesla Model Y remained the best-selling light truck in the state, beating out the second-most popular option — the Honda CR-V — by more than 10,000 registrations. In its specific segment, the Tesla Model Y maintained its stronghold, keeping more than 50% of the market share of luxury compact SUVs.

Among alternative energy vehicles, the Model Y continues to top the list, while the Model 3 was the fourth-most registered and the Model X landed at No. 23.

Overall vehicle registration data

The California New Car Dealers Association estimates there will be around 1.74 million new light vehicle registrations in 2026 — which includes cars, SUVs, pickup trucks and vans. This is a slight decline from the 1.8 million registrations in 2025, and it would be the lowest annual number of registrations since 2022.

In the first quarter of 2026, the state registered roughly 416,000 light vehicles, a nearly 9% drop compared to the first quarter of 2025.

In the report, the association cites affordability as the primary factor to falling sales and registrations.

“Finance costs are still high due to high interest rates, vehicle transaction prices are nearing $50,000, and income growth is barely keeping up with inflation,” the report said. “Unforeseen events like fluctuating tariff rates, the phase-out of (battery electric vehicle) tax credits, the war in Iran, and rising gasoline prices have all added to the uncertainty.”

Full battery electric vehicles had a rough first quarter, with only 57,000 vehicles registered. Throughout all of 2025, quarterly registrations of fully electric vehicles spanned from 85,000-108,000. At the same time, the hybrid vehicle market is staying afloat.

More than 87,000 hybrid vehicles — excluding plug-in hybrids — were registered in California during the first quarter of 2026, marking a 5,000-vehicle increase from the same time period in 2025.

While new vehicles fought an uphill battle year-over-year, the used vehicle market remained stable. Compared to the same period in 2025, the first quarter of 2026 had a 0.9% increase in used car registrations.