ZEV Sales Fall in First Quarter of 2025, Raising Alarm Over EV Mandate Feasibility

Tesla Sales Down over 15%; ZEV Market Share Drops to 20.8% 

SACRAMENTO—Sales of zero-emission vehicles (ZEVs) in California fell in the first quarter of 2025, dropping to just 20.8% of all new car sales, down from 22% in 2024. Tesla sales alone dropped more than 15% compared to the same period last year, underscoring broader concerns about waning consumer demand as the State of California prepares to implement a steep increase in its zero-emission vehicle mandate starting with 2026 model year vehicles, according to Experian Automotive as published in the California New Car Dealers Association's most recent Quarterly Auto Outlook report.

Meanwhile, hybrid vehicle sales continued to rise, growing to 17.9% of the market in Q1. The trendline reveals that consumers remain interested in more efficient options, but many aren’t ready to go fully electric. Meanwhile, the state’s Advanced Clean Cars II (ACC 2) mandate requires a steady increase in ZEV adoption each year. Year-over-year ZEV sales growth from Q1 2024 to Q1 2025 was just 7.3%, a steep drop from the double-digit annual growth seen in previous years.

“California has made incredible strides toward a clean transportation future, but the first sales numbers of 2025 continue to trend in the wrong direction and should be a wake-up call,” said Brian Maas, president of the California New Car Dealers Association. “It’s time to admit that the state has hit a wall amid a lack of confidence in ZEV adoption, as well as a statewide shortage of EV charging stations. We believe California can and will succeed in its transition to clean transportation, but we must calibrate the policy to reflect market realities and the needs of everyday Californians.”

Under California’s ACC 2 rule, 35% of all new cars sold in model year 2026 must be zero-emission, ramping up each year to a full ban on new gas and hybrid vehicles by 2035. Since model year 2026 vehicles are entering the market now, dealers and manufacturers are already facing pressure to comply with the mandate. But limits in available EV charging infrastructure, political uncertainty, and reliability concerns are already challenging compliance in 2025.

Other states that adopted California’s EV mandate are rethinking their timelines. Earlier this month, Maryland Governor Wes Moore authorized a two-year enforcement delay for the state’s own ACC II rollout.

Public skepticism is also rising. A recent poll by Tulchin Research found that 61% of California voters oppose the EV mandate after learning about its details. Just 13% strongly supported the policy, while 48% said they strongly opposed it. Those concerns cut across ethnic and regional lines: Majority opposition was recorded among Latino (66%), Black (54%), Asian American (52%), and White (58%) voters. Even in typically left-leaning regions like the Bay Area, 56% of respondents opposed the plan.

Nearly 30% of respondents cited the lack of charging infrastructure as their top concern. Despite ongoing investment, California has just 178,500 EV chargers, far short of the 1.2 million needed by 2035. The state would need to increase its current charger installation pace five-fold to meet its target. 

Voters also expressed significant worries about affordability, with 20% naming it their biggest issue. Others pointed to technological limitations, while some raised concerns about limited consumer choice and how the state plans to enforce such a sweeping mandate.

Tesla, long the EV market leader, is facing a sharp and sustained downturn. Registrations fell 15.1% through March compared to the same period last year, marking a year and a half of continuous quarterly declines. Tesla’s market share dropped by 11.6% in Q1, and the company, embattled by its controversial CEO, now holds less than half of California’s total ZEV market. This sustained decline is dragging down the state’s overall ZEV performance and reveals the deepening disconnect between the state’s aggressive sales targets and recent consumer behavior.

Failing to meet ACC 2 comes with steep penalties for manufacturers: $20,000 per noncompliant vehicle sold. Instead of paying fines, automakers will simply cut shipments of cars to California, or stop sending them altogether. What will the impact be?  

Billions lost for public services: New car sales generate $13 billion annually in state and local tax revenue, funding fire departments and law enforcement, schools, public safety and first responders, roads, parks and other essential services.

Risking climate progress: If options shrink and prices spike, drivers who aren’t ready for an EV or whose lifestyles don’t support one will hold onto older, higher-emission vehicles longer—undermining the goals the mandate sets out to achieve.

A major infrastructure gap: California needs 1.2 million chargers by 2035 but has just 150,000 today. Renters and those in multi-unit housing, who will have to rely on public charging, will be hit hardest.

Fewer new cars, higher prices: Automakers won’t absorb massive fines; they’ll just reduce shipments. Even traditional hybrids, despite their lower emissions and consumer popularity, don’t count toward the mandate because they aren’t classified as zero-emission vehicles. That means automakers can’t use hybrid sales to meet their targets, further limiting consumer choices. With fewer options, prices will rise across the board—on EVs, hybrids, and gas-powered cars alike. And with EV subsidies uncertain under the current administration and Congress, affordability concerns will only grow, making it even harder for consumers to make the switch.

More information, including an explainer video, can be found at CalibrateCA.org.