Investors are looking for evidence Musk’s politics are hurting Tesla. It’s hard to find, but California might be turning against Musk—slowly.

Tesla's electric-vehicle registrations in California fell about 12% last year, according to industry data, indicating mounting challenges for the automaker in the key U.S. market.

The electric-vehicle maker’s sales in by far the biggest EV market in the US fell almost 8% in the fourth quarter and 12% for the year, according to data sourced by the California New Car Dealers Association. Annual registrations of the Model 3 sedan dropped by more than a third.