California’s Advanced Clean Car II (ACCII) regulations are set to go into effect starting with model year 2026 vehicles. These rules include requirements that automakers provide Zero Emission Vehicles (ZEVs) for sale in California in increasing volume through 2035.
In recent weeks, there has been a lot of misinformation circulating about how these rules operate and the capacity of the industry to meet them. Some in the auto industry are portraying these rules as a surprise, despite the fact that discussions surrounding the ACCII regulations have been ongoing since 2020. These rules are a natural extension of the ZEV regulations first adopted in 1990. Automakers have been well aware of these regulations, and some have already had ZEVs account for over 30 percent of their California sales.
However, there is a historical pattern of the auto industry resisting change by claiming that regulations pose a threat to their business. In 1970, Ford’s Lee Iacocca stated that Clean Air Act’s restrictions on tailpipe pollution could potentially halt automobile production and harm the American economy. Fast forward 55 years, and similar arguments are being recycled to challenge California’s ACCII standards.
The reality is that these standards are achievable, and with fewer sales than opponents of ACCII suggest. Automakers offering appealing EV options to consumers are well-positioned to comply with the regulations. California’s clean car rules will not only save drivers money at the pump but also mitigate the impact of climate change and decrease exposure to harmful air pollution for all residents of the state. It is crucial not to let the resistant factions in the auto industry hinder the state’s progress towards better transportation alternatives than traditional gasoline and diesel vehicles.
What is the actual ZEV sales requirement?
The true ZEV sales requirement for automakers in model year 2026 ranges from 9 to 30% of their sales. This requirement can be fulfilled using plug-in hybrids with gasoline engines. The flexibility provisions in the ZEV regulation allow automakers to utilize past credits for compliance, engage in early action and pooling provisions, and incorporate plug-in hybrids to reduce the number of fully electric vehicles required. The specific requirement depends on how each manufacturer chooses to employ these flexibility provisions.
By utilizing past credits and 2026 plug-in hybrid sales, an automaker could meet the 2026 sales requirements with as little as 2% fully electric ZEV sales. Most automakers currently possess a surplus of ZEV credits in the existing program, which could offset a portion of the 2026 requirement. Furthermore, automakers can spread out the credits over the initial five years, reducing the total 2026 requirement to less than 30% ZEVs, with only 23% needing to be battery electric or fuel cell electric vehicles. Automakers lacking sufficient existing credits can purchase credits from other manufacturers.
Supply and demand
A common argument from automakers lagging in ZEV sales is that demand for EVs is low. However, buyers cannot purchase EVs that are not available for sale. The low percentage of ZEV sales by Honda in California in 2024 is more reflective of the limited supply of ZEV models by Honda rather than consumer demand. In contrast, Hyundai, offering a variety of EV models, saw over 30% of its sales in California being fully electric EVs and plug-in hybrids in 2024.
Automakers like Honda and Toyota, with minimal EV offerings, will struggle to meet ZEV requirements unless they enhance their EV lineup. Blaming consumers for not purchasing EVs that automakers have not produced or offered for sale is unfair.
Tesla’s downward trend is masking increasing EV sales from other carmakers
While overall EV sales in California remained stable from 2023 to 2024, Tesla experienced an 11% decline in sales, while other manufacturers saw a 13% increase. This decline in Tesla’s sales is likely influenced by factors unrelated to EV interest, such as CEO Elon Musk’s controversial political affiliations. Tesla’s limited model range and slow updates have also contributed to the decline in sales. Additionally, Tesla’s once exclusive charging network is now accessible to drivers of other EV models.
The ACCII and ZEV regulations are crucial for emission reduction and air quality improvement
The ACCII regulations, including ZEV rules, offer economic benefits to drivers and reduce air pollution in California. It is essential to continue transitioning to cleaner transportation options to reap these benefits for the state and its residents.
