California Sees First Decline in ZEV Registrations Since 2020

In a surprising turn of events, zero-emission vehicle (ZEV) registrations in California experienced a decline in 2025, marking the first year-over-year drop since 2020. This information comes from the California New Car Dealers Association’s Q4 2025 California Auto Outlook report, which provides a comprehensive analysis of new vehicle registration trends across the state.

After several years of growth following the pandemic, the momentum for electric vehicles appears to have reversed. In 2025, ZEV registrations accounted for 20.9% of the market, a decrease from a peak of 22% in 2024. This decline raises concerns about the future trajectory of California’s ZEV market.

Related: California Stalls on EV Subsidies as Trump Cuts Federal Rebate

The registration data indicates a significant softening in consumer adoption during the latter part of 2025. Notably, ZEV registrations in November and December fell below 13%, a stark contrast to the surge seen in the third quarter, which was largely driven by the impending expiration of federal tax credits.

Despite this setback, California remains a significant player in the ZEV landscape, accounting for 28.5% of total U.S. ZEV registrations in 2025. While demand for ZEVs has cooled, hybrid vehicles have gained traction, showcasing strong year-over-year growth. In fact, hybrid sales slightly outpaced ZEV sales in the fourth quarter, capturing 20% of the market, according to the report.

Gas-powered vehicles continue to dominate the market, representing the largest segment with 54% of new vehicle registrations in 2025. Toyota emerged as California’s top-selling brand, securing a 17.8% market share. The Toyota Camry maintained its status as the best-selling passenger car in the state, with 62,324 registrations, while the Toyota Tacoma led the compact and mid-size pickup category with 45,258 registrations.

On the other hand, Tesla faced challenges in 2025, with registrations dropping by 11.4%. This decline resulted in a decrease in market share from 11.6% in 2024 to 9.9% in 2025.

Looking ahead, California’s new vehicle market is projected to soften in 2026. Registrations are expected to dip by 1.5%, falling to just under 1.8 million units. Factors contributing to this decline include higher transaction prices, tariff pressures, and a cooling labor market, as highlighted in the report.

Topics
California

In a surprising turn of events, zero-emission vehicle (ZEV) registrations in California experienced a decline in 2025, marking the first year-over-year drop since 2020. This information comes from the California New Car Dealers Association’s Q4 2025 California Auto Outlook report, which provides a comprehensive analysis of new vehicle registration trends across the state.

After several years of growth following the pandemic, the momentum for electric vehicles appears to have reversed. In 2025, ZEV registrations accounted for 20.9% of the market, a decrease from a peak of 22% in 2024. This decline raises concerns about the future trajectory of California’s ZEV market.

Related: California Stalls on EV Subsidies as Trump Cuts Federal Rebate

The registration data indicates a significant softening in consumer adoption during the latter part of 2025. Notably, ZEV registrations in November and December fell below 13%, a stark contrast to the surge seen in the third quarter, which was largely driven by the impending expiration of federal tax credits.

Despite this setback, California remains a significant player in the ZEV landscape, accounting for 28.5% of total U.S. ZEV registrations in 2025. While demand for ZEVs has cooled, hybrid vehicles have gained traction, showcasing strong year-over-year growth. In fact, hybrid sales slightly outpaced ZEV sales in the fourth quarter, capturing 20% of the market, according to the report.

Gas-powered vehicles continue to dominate the market, representing the largest segment with 54% of new vehicle registrations in 2025. Toyota emerged as California’s top-selling brand, securing a 17.8% market share. The Toyota Camry maintained its status as the best-selling passenger car in the state, with 62,324 registrations, while the Toyota Tacoma led the compact and mid-size pickup category with 45,258 registrations.

On the other hand, Tesla faced challenges in 2025, with registrations dropping by 11.4%. This decline resulted in a decrease in market share from 11.6% in 2024 to 9.9% in 2025.

Looking ahead, California’s new vehicle market is projected to soften in 2026. Registrations are expected to dip by 1.5%, falling to just under 1.8 million units. Factors contributing to this decline include higher transaction prices, tariff pressures, and a cooling labor market, as highlighted in the report.

Topics
California