Registrations of Tesla cars in California fell 24% in the second quarter, indicating mounting challenges for the electric vehicle maker, according to a report by the California New Car Dealers Association.

High interest rates and stiff competition has led to subdued demand for electric vehicles as consumers opt for less expensive hybrid cars.

The Elon Musk-led electric vehicle maker's Model Y crossover continues to be the best-selling model in the state, but the automaker's market share in the first half of the year fell to 53.4% from 64.6% in the corresponding year-ago period.

"Tesla's allure seems to be wearing off, signaling potential trouble for the direct-to-consumer manufacturer," the report said.

Meanwhile, the market share of hybrid vehicles rose to 13.4% in the three months to June from 10.8% a year ago. Battery electric vehicles command 21.9% of the market, marginally higher than 21.8% a year ago.

  - Reuters