The Wall Street Journal: Sales of Tesla’s high-end Model S are dropping in key markets

Sales of Tesla Inc.’s TSLA, +1.76%   high-end Model S sedan have taken a big hit in the company’s most important U.S. market, California, as the electric auto maker is leaning more heavily on selling the lower-priced Model 3 compact car, new data show.

Falling sales of the Model S—and its sister sport-utility vehicle Model X—threatens Tesla’s growth goals and profit ambitions as it must rely more on its cheaper Model 3 to make up the difference.

Registrations of new Model S sedans in the second quarter plummeted 54% to 1,205 in California, according to the Dominion Cross-Sell report that compiles data from state motor-vehicle records. The Golden State is a strong indicator of demand as Tesla’s largest U.S. market, representing 40% of Model S registrations in the country last year, according to auto-sales tracker Edmunds.com Inc.

The new data from research firm Dominion Enterprises indicates the stylish sedan that arguably changed car buyers’ view of electric cars is losing its luster. Tesla is increasingly dependent on sales of the smaller Model 3, which starts at about $35,000, less than half the price of the most basic Model S.

An expanded version of this story appears on WSJ.com

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