This marks the third consecutive quarter of declining sales for the EV giant in the Golden State, raising concerns about Tesla’s future dominance, according to a report released by the organisation on Thursday.

While the Tesla Model Y remained California’s best-selling electric car, the company’s overall market share shrunk significantly.

Tesla’s hold on the battery electric car market dipped to 53.4% in the first half of this year, down from 64.6% during the same period last year. Tesla’s total California sales were down 17% year-to-date.

The CNCDA report suggested a potential erosion of Tesla’s brand appeal, saying, “Tesla’s allure seems to be wearing off, signalling potential trouble for the direct-to-consumer manufacturer.”

Several factors are likely contributing to Tesla’s California woes. Increased competition from newer EV models is a major challenge.

Established automakers like Ford and Hyundai, along with new players like Rivian, are all vying for a larger share of the growing California EV market.

Notably, the battery electric vehicle’s (BEV) market share accounted for 21.9% of all auto sales in the state, said the report, highlighting the significant market shift towards electric vehicles.

“In stark contrast, mainstay brands like Toyota, Hyundai, and Ford are on the upswing, with significant gains and excitement around new EV models that Californians seem eager to adopt,” said the CNCDA in a press release. This year, Toyota’s BEV registrations rose 108.1%, and Hyundai’s BEV registrations rose 65.7%.

Adding to Tesla’s troubles is the shifting perception of CEO Elon Musk within California, a Democratic stronghold and the nation’s largest EV market.

Musk’s public criticism of the state and his embrace of Republican figures tarnished his image in some Californians’ eyes.

This week’s social media spat with California Governor Gavin Newsom over the relocation of SpaceX and Tesla headquarters has further strained the relations.