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Toyota says California’s electric vehicle mandate is ‘impossible’ to meet

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(The Center Square) – Toyota’s CEO said California’s semi-national mandate that 35% of 2026 model year vehicles be zero-emission is “impossible” to meet.

According to the California New Car Dealers Association, 25.6% of new vehicles were all-electric or plug-in-hybrid vehicles in the third quarter of 2024. Eleven additional states and the District of Columbia have agreed to meet California’s zero-emissions light passenger vehicle standards, with some starting California’s targets in model year 2026, and the remainder in model year 2027.

“I have not seen a forecast by anyone … government or private, anywhere that has told us that that number is achievable. At this point, it looks impossible,” said Toyota Motor North America COO Jack Hollis, as reported by CNBC. “Demand isn’t there. It’s going to limit a customer’s choice of the vehicles they want.”

One example is how in 2023, Stellantis, which owns Jeep, made gasoline-powered non-hybrids available only as special order vehicles in California and other states that have adopted California Air Resources Board Standards.

Under California’s Advanced Clean Cars II mandate that starts with model year 2026 vehicles, automakers must either sell enough cars or buy enough credits for the equivalent of 35% of their vehicles sold in California to qualify as zero emission vehicles, of which up to 20% can be plug-in-hybrids and at least 15% of which must be all-electric. Automakers will pay a $20,000 fine per ZEV credit they are short, meaning carmakers will have to either buy credits from other automakers with excess credits, or sell fewer non-ZEV vehicles.

This ACC II standard applies to Massachusetts, New York, Oregon, Vermont, and Washington for model year 2026, and Colorado, Delaware, Maryland, New Jersey, New Mexico, Rhode Island, and Washington, D.C. for model year 2027.

With the 2026 model year vehicles starting sales in the second half of 2025, zero-emissions vehicle sales as a share of total sales would need to grow 37% in about a year to meet the state’s ZEV goals; EV sales are only starting to grow again since stagnating in 2023, suggesting a return to explosive growth could be unlikely with the current level of EV technology.

“It could be that EV sales have temporarily plateaued and will start rising again once manufacturers make more improvements,” said Cato Institute state policy analyst Marc Joffe to The Center Square. “For those of us used to filling up a gasoline powered car in just a couple of minutes, it is going to be hard to accept the 30-45 minute wait.”

Joffe also noted that high and rising energy costs in California could be eating into EV demand.

“One challenge for EVs in California is the high cost of electricity,” said Joffe. “This means that charging a vehicle is much more expensive here, cutting into the financial benefits of owning an EV.”

Energy prices are so high the California Air Resources Board says the state is near the point at which it’s cheaper to propel a car on gasoline than it is on electrons. Last week, CARB voted to create a $105 billion credit for EV charger operators to be paid for with rising carbon emissions fees on the petroleum refineries that produce gasoline and diesel. CARB estimates the measure will create a 47 cent per gallon pass-through cost for gasoline in 2025.

By raising the price of gasoline, and subsidizing electric vehicle charging, CARB’s new Low Carbon Fuel Standard incentivizes more Californians to get out of gasoline-powered cars either acquire electric vehicles or take public transportation.

California is able to pass its own emissions standards via a waiver granted by the Environmental Protection Agency, which first granted California a waiver to deal with smog pollution in the Los Angeles area in the latter half of the 20th century. The Obama administration ordered an expansion of California’s waiver just pollution to include emissions as well. In 2019, the Trump administration revoked California’s EPA waiver, a move that was held up in courts until the Biden administration put the waiver back into place in 2021.

It’s likely that the second Trump administration could revoke California’s EPA waiver once it takes office in January, which would — if upheld in court — invalidate many of the emissions programs created by California and voluntarily adopted by many Democrat-run states.

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