July 18 (Reuters) - Registrations of Tesla cars

in California fell for the third consecutive quarter in the

April-to-June period, indicating mounting challenges for the EV

maker, according to a report by the California New Car Dealers

Association on Thursday.

High interest rates and stiff competition have led to

subdued demand for electric vehicles as consumers opt for less

expensive hybrid cars.

Potential Tesla customers in the United States have been

shying away from buying its electric cars, partly due to CEO

Elon Musk's polarizing persona.

Musk's embrace of Republicans and controversial comments

have sparked concerns about Tesla's brand, especially in liberal

states such as California, which accounts for 10% of the firm's

global deliveries.

The world's richest man publicly endorsed former

President Donald Trump for the first time in the U.S.

presidential race after the assassination attempt on the

Republican candidate on Saturday.

The electric-vehicle maker's Model Y crossover continues to

be the best-selling model in the state, but its market share in

the first half of the year fell to 53.4%, from 64.6% in the

corresponding year-ago period.

Tesla's registrations in the state were about 24% lower

in the second quarter.

Its market share in the BEV market in California fell to

51.5% in the second quarter from a year ago, according to a

Reuters calculation based on the data.

From January to June, Tesla saw its registrations in

California slump 17%, even as distant rivals such as Hyundai

Motor ( HYMTF ), Kia Motors, and BMW, Mercedes-Benz

, Ford, as well as Rivian increased

sales by double-digit percentage points.

"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 commanded 21.9% of the market, marginally

higher than 21.8% a year ago.

Tesla, which is set to report quarterly results on Tuesday,

handed over more vehicles to customers in the second quarter

than analysts had expected, although deliveries were lower than

a year ago.