Tesla (NASDAQ:TSLA), the world's most valuable automaker, releases Q3 2020 earnings on Wednesday evening, Oct. 21. But late Monday, investors got a glimpse at how the company fared in California, its largest U.S. market, thanks to a report from research firm Cross-Sell.
Cross-Sell compiled vehicle registration data and found that, although overall third-quarter Tesla deliveries hit a record at 139,900, Tesla registrations were down 13% year over year in the Golden State. The primary culprit was a big drop in Model 3 registrations.
A pioneer in promoting electric vehicle (EV) ownership and use, California's electric vehicle market is seen as a bellwether for the U.S. EV industry as a whole. From July 2020 through September 2020, about 16,200 Teslas were registered in the state. That was an improvement from the 9,800 registrations in the previous quarter (April through June) but down from the more than 18,000 registrations in Q3 2019.
Surprisingly, California registrations of Tesla's newest vehicle, the Model Y crossover SUV, surpassed registrations of the best-selling Model 3 sedan. Cross-Sell reported only 6,500 Model 3 registrations in California in Q3 compared to almost 7,300 for the Model Y.
This could indicate that the Model 3 is approaching market saturation in California. Or it could indicate that consumers who previously bought the Model 3 because it was the only affordable Tesla on the market are more interested in a comparably priced crossover SUV than a sedan. Or it could just be a fluke.
It's important not to read too much into a single data point from a single quarter. Cross-Sell compiled data from 23 states, which it said comprised about 65% of the U.S. market. It found that registration growth in other states offset California's declines, leaving Q3 registrations roughly unchanged at 32,800 vehicles.