Tesla Model Y, Model 3 Dominate California Car Sales in Q1

California’s new vehicle market is on the rise, with vehicle registrations expected to approach 1.8 million units this year, a 6.9% increase from 2022, according to an update from the California New Car Dealers Association on Monday.

The surge in sales comes after three years of below-average sales, resulting in pent-up demand that’s predicted to fuel the market for the remainder of 2023.

In the first quarter of 2023, new light vehicle registrations in California increased by 5.8%, slightly below the 8.4% improvement observed at the national level. Despite this, the state’s new vehicle market is expected to outpace last year’s results in the remaining three quarters.

The luxury SUV market share approached 20% in the first quarter of 2023, marking a significant uptick from the previous year’s share. Hybrid and electric vehicles also saw a significant increase, with the estimated electric vehicle market share reaching 19.5% in the first quarter of 2023. This is a substantial jump from the 17.1% share observed in 2022.

The standout performer in this burgeoning market is the Tesla Model Y, which emerged as the best-selling vehicle in California’s new vehicle market in the first quarter of 2023. The Model Y, a luxury compact crossover electric SUV, has made a significant impact on Tesla’s market share, accounting for a whopping 64.5% of Luxury Compact SUV sales in the state.

Despite supply chain issues and limited vehicle inventories impacting the sales results of many models, the Tesla Model Y has managed to claim a substantial market share, underlining the growing popularity of electric vehicles among California’s consumers.

The Tesla Model 3, another offering from the electric vehicle manufacturer, also performed well as it topped the Near-Luxury Cars segment at 48.9%, contributing to the dominance of Tesla in California’s new vehicle market.

For the Luxury Mid Size SUV segment, the Tesla Model X was third with 11.9%, behind the Mercedes GLE-Class and Lexus RX at 12.8% and 16.2% respectively.

The top-selling passenger car was the Model 3 at 12.7%, beating out the Toyota Camry at 10%, while the top-selling light truck was the Model Y at 10.3%, beating out the Toyota RAV4 at 4.3%.

These results highlight a shift in consumer preferences toward more sustainable and luxurious vehicle options. With improving vehicle inventories and the release of pent-up demand, the market is set to experience further growth, potentially pushing sales even higher.

“We are getting new inventory, and the latest ZEV models are rolling out from the mainstay manufacturers. It’s exciting to offer the types of cars our customers have been asking for,” said CNCDA Chairman Tony Toohey on the rising trend.

The Model Y cannot be stopped. In Q4, it also dominated new car sales in California. The Model Y continues to also top auto sales, such as in Europe in Q1 and beyond.