Despite California’s push towards the “2035 total cessation of new gasoline vehicle sales” plan, the latest data shows that electric vehicle sales in California stagnated in 2024. The industry is concerned that if the state government forcibly advances the plan through fines on automakers and other means, it may lead to fluctuations in the gasoline vehicle market, causing shortages and price increases.
The California New Car Dealers Association (CNCDA) highlighted multiple key points in its latest annual sales report, including the rapid deceleration of California’s zero-emission electric vehicle (ZEV) market, with consumers showing a preference for hybrid vehicles.
Statistics show that in 2024, California registered over 1.759 million new vehicles, with 387,368 being zero-emission electric vehicles, accounting for 22% of the total. While the number of purchases continues to rise, the growth rate has significantly slowed compared to previous years and even appears to have hit a standstill.
According to the CNCDA data, from 2021 to 2023, zero-emission electric vehicle sales in California experienced substantial growth year after year: compared to the annual percentage in 2020, there was a sharp increase of 62% in 2021; 56% from 2021 to 2022; and a peak increase of 76% from 2022 to 2023.
However, in the recently concluded 2024, the annual share of new vehicles at 22% saw an increase of less than 1 percentage point compared to 2023, with even Tesla’s new vehicle registrations in California dropping by 11.6%.
Industry experts believe that the sharp decline in electric vehicle sales will have an impact on both automakers and consumers. This is because California is advancing a program called “Advanced Clean Cars II.”
In order to achieve zero emissions goals, the California Air Resources Board (CARB) passed the “Advanced Clean Cars II” regulations in 2022, aimed at gradually phasing out gasoline-powered cars, trucks, and SUVs. Towards the end of last year, the Biden administration also authorized California to gradually halt the sale of new gasoline vehicles.
Under the specific plan of “Advanced Clean Cars II,” by 2026, major automakers must achieve a 35% sales ratio of zero-emission vehicles in California, gradually increasing to 68% by 2030, and ultimately achieving a complete ban on the sale of new gasoline vehicles in California by 2035. The new rules apply to new vehicle sales and do not affect existing gasoline vehicles.
According to the Northeast States for Coordinated Air Use Management (NESCAUM) summary, all manufacturers must comply with California’s mandatory regulations by adjusting the proportion of vehicle types and producing more zero-emission vehicles, or else face substantial civil fines.
Cathy, a manager at a used car dealership in California, is worried that if manufacturers are forced to produce more electric vehicles, it may lead to shortages of gasoline vehicles in the California market and subsequently drive up prices. Faced with stagnant market demand, the dealership association has started lobbying the government to temporarily postpone the implementation of this regulation.
Although the current new car inventory in the automotive market is relatively sufficient, major automakers have offered more car purchase incentives. However, monthly new car loan costs remain high.
Since December of last year, the average car loan interest rates have risen again, with a significant increase in January of this year. Edmunds, a leading automotive trading website, stated that in the fourth quarter of 2024, the percentage of consumers with monthly new car loan costs exceeding $1,000 reached 18.9%, reaching a historic high.
“Obtaining a zero loan rate is almost impossible still,” stated an analyst at Edmunds. “Even if buyers can find a 0% loan rate offer, they must have excellent credit qualifications, which is truly a challenge for most consumers.”