California’s initiative to promote electric vehicle (EV) adoption is encountering a significant challenge: sales of electric cars are not increasing at the expected rate.
After a robust three-year growth period, EV sales in the state appear to have leveled off, raising concerns about whether California can fulfill its ambitious regulation that bans the sale of new gasoline-powered vehicles.
Data from the California Energy Commission indicates that about 25.3% of all new car registrations in 2024 were classified as zero-emission vehicles, a modest increase from 25% in 2023. This stability in sales follows a rapid climb, where only 1 in 13 cars sold in 2020 was zero-emission. Currently, the market share of these vehicles has tripled compared to four years ago.
However, the stagnating growth could jeopardize the state’s climate and air quality objectives. According to a mandate approved in 2022, automakers are required to ensure that 35% of their new car models for 2026 are zero-emission. This leaves considerable room for growth as new models for 2026 begin to appear later this year.
David Simpson, who operates three car dealerships in Orange County, expressed concerns about the lack of rising demand for electric vehicles. Initial sales of certain models, such as the GMC Hummer EV, were strong, but demand has since dwindled. Although models like the Chevrolet Equinox and Blazer EV are selling reasonably well, they aren’t experiencing significant sales increases either.
“Sales are decreasing,” Simpson noted. “We’ve catered to the buyers who wanted these cars, and they’ve purchased them, but demand has not surged. I don’t see households transitioning to 100% electric.”
Dave Clegern, representing the California Air Resources Board, remarked in an email that while the rate of zero-emission vehicle sales in California has slowed, this trend aligns with a broader stagnation in car sales overall last year.
Despite regulations restricting automaker sales, residents aren’t obligated to purchase electric vehicles. This reality could present a significant challenge for Governor Gavin Newsom, who has centered his climate change and pollution reduction efforts around the promotion of electric cars. A spokesperson for Newsom opted not to provide a comment on the issue.
There is some flexibility in the state mandate, according to Clegern. The requirements are structured to be multi-year; automakers must average their electric vehicle sales from model years 2022 through 2024 to meet the 35% target for 2026 vehicles. Moreover, manufacturers may purchase credits from companies that have surpassed these targets, such as Tesla or Rivian. Should manufacturers fall short of their quotas, California could enforce hefty penalties of $20,000 for each vehicle that does not meet the required sales levels.
“Even if manufacturers do not meet these specific requirements, they might still be in compliance,” Clegern stated.
Brian Maas, president of the California New Car Dealers Association, suggested that automakers may look to lessen sales of gasoline-powered cars to avoid penalties. He warned that doing so could limit options for buyers, raise prices, and drive some consumers to neighboring states such as Nevada or Arizona in search of their preferred vehicles, while others might cling to older, more polluting options.
“The current mandate as drafted is unlikely to be met,” Maas asserted, emphasizing that automakers will need to respond. “A sensible approach would be to limit inventory.”
The automotive industry group Alliance for Automotive Innovation has voiced similar worries since December when it highlighted in a memo the challenges facing California and other states with EV sales mandates. John Bozzella, the group’s CEO, stated that California’s regulations were “not achievable” and noted the recent political shifts might impact federal support for electric vehicle initiatives.
California has been granted a waiver by the U.S. Environmental Protection Agency, allowing it to uphold its gas vehicle phase-out regulations; however, there are indications that federal challenges may arise. Experts fear potential cuts to incentives for electric vehicle purchases, such as the $7,500 federal tax credit, which could further hinder sales. Newsom has pledged state support for these incentives, although fiscal pressures may complicate these assurances.
Despite the challenges, California leads the country with over 2 million electric cars purchased, doubling the figure in the past two years. However, the electric vehicle segment witnessed only a 1.1% increase in sales during 2024, reaching 378,910 units, compared to 374,668 in 2023. Likewise, plug-in hybrids remain stable, while sales of hydrogen vehicles have dropped dramatically from 3,119 to just 600 in 2024.
The overall vehicle market has experienced a slight decline, with total auto sales in California falling to approximately 1.75 million vehicles last year. Loren McDonald, chief analyst for a charging app, noted that evolving consumer demographics are influencing this trend.
The market is shifting away from early adopters who favored electric vehicles, moving towards a broader consumer base that may have different expectations and concerns.
Many new potential buyers come from middle-income backgrounds and may find charging access or upfront costs significant barriers to entry. Concerns over range and the availability of operational charging stations add to this hesitation.
The challenges for Tesla’s market share cannot be overlooked. Following controversies involving their CEO, many traditionally supportive consumers are reconsidering their loyalty. Tesla’s sales have seen an 11% drop in California last year, significantly impacting overall EV sales statistics due to its substantial market presence.
Affordability also poses a significant barrier, although experts like McDonald see potential for improvement as more electric models are made available at competitive price points.
Although there are initiatives to help educate consumers about the long-term savings associated with electric vehicles, many remain unaware of the financial benefits which could influence their purchasing decisions.
Looking ahead to 2025, optimism remains. The market may see new electric models priced under $50,000, alongside technological developments that could enhance charging speed and enable vehicles to offer power back to homes.
