California’s ZEV Stall: Sales Peak, Federal Credit Expires, and State Scoping Plan Slips Out of Reach

This is the fourth in a series of articles examining California’s transportation fuels progress toward the greenhouse gas (GHG) reduction targets set by the 2022 Scoping Plan. The first article – Mind the Gap: Transportation Emissions vs. California’s 2022 Scoping Plan Pathway – provided background and an overview of how the transportation sector has performed in reducing GHG emissions relative to the 2022 Scoping Plan pathway.[1] The second article – The Gasoline Gap: How California’s Biggest Emissions Source Is Falling Behind – focused on how the trajectory of gasoline emissions is tracking versus the 2022 Scoping Plan. The third article – Diesel’s GHG Reduction Success Story: How California’s Second-Biggest Transportation Fuel Emissions Source Is Ahead of Schedule. This article examines how zero-emission vehicles (ZEVs)[2] have tracked the 2022 Scoping Plan.

Bottom Line Up Front: Gasoline displacement from ZEVs has met 2022 Scoping Plan expectations so far and ZEV sales have, through 2024, exceeded Scoping Plan projections. However, ZEV sales are now falling sharply as the federal tax credit has expired and consumer demand has softened, causing trajectories to deviate from Scoping Plan projections and resulting in lower ZEV fleet growth.

Figure 1 displays historical ZEV sales alongside the Scoping Plan’s projected trajectory. Through 2024, actual sales tracked the Plan closely and, in several years, exceeded it – a genuine success of California’s incentive-supported ZEV market. From 2023 through 2025, however, sales appeared to plateau around 21-25% of new car sales, a level consistent with saturation of the higher-end segment of the market.[3] Sustaining growth beyond that ceiling requires attracting price-sensitive consumers, a segment for which ZEVs must closely match the utility, refueling convenience, and purchase costs of conventional gasoline vehicles. That challenge has been compounded by the September 30, 2025 expiration of the federal $7,500 purchase incentive and the 2025 federal repeal of California’s Advanced Clean Cars II (ACC II) ZEV sales waiver, removing two of the primary policy pillars supporting demand. 1Q2026 sales data confirm the effect. In 2035 and beyond, the Scoping Plan projects ZEV sales at levels 88% higher than current 1Q2026 sales rates would produce – a gap that will only widen as long as the market conditions driving today’s decline remain in place.

Figure 1. New Zero Emission Vehicle SalesSource: Stillwater Analysis of Scoping Plan Data and CEC ZEV and Infrastructure Stats Data

Figure 2 translates those sales trends into fleet size – the total number of ZEVs on California roads at any given time. Through 2025, the cumulative ZEV fleet tracked Scoping Plan projections closely, reflecting the sustained sales growth supported by federal incentives and state mandates over the prior decade. Fleet size, however, is a cumulative measure: it grows only as fast as new vehicle sales add ZEVs faster than older ones retire. With new ZEV sales now sharply lower, that growth appears to be stalling. A ZEV fleet far smaller than the Scoping Plan envisioned means proportionally less gasoline displaced (as Figure 3 shows) and the gap between the Scoping Plan’s fleet projections and current trajectory will widen the longer sales remain depressed.

Figure 2. ZEV Population TrendSource: Stillwater Analysis of Scoping Plan Data and CEC ZEV and Infrastructure Stats Data

Figure 3 shows the bottom-line consequence of the fleet size divergence shown in Figure 2: the volume of gasoline that ZEVs displace. Through 2025, ZEV-driven gasoline displacement closely tracked Scoping Plan projections. From 2026 forward, however, that alignment appears to be headed for a breakdown. A smaller-than-projected ZEV fleet means less gasoline displaced each year, and the cumulative gap between the Scoping Plan’s displacement curve and the likely future trajectory will widen over time.[4] Because transportation gasoline is California’s largest single source of GHG emissions, this shortfall directly constrains the state’s ability to meet its 2030 and 2045 climate targets as defined in the Scoping Plan.

Figure 3. ZEVs Reduced Gasoline GallonsSource: Stillwater Analysis of Scoping Plan Data and CEC ZEV and Infrastructure Stats Data

Conclusion:

ZEV deployment has closely tracked the Scoping Plan so far, matching sales, population, and gasoline reduction targets through 2025. However, the recent ZEV sales declines indicate the future ZEV market is diverging from the Scoping Plan. As indicated in the previous article in this series, for the targets of the Scoping Plan to be achieved, gasoline use needs to be greatly reduced and as shown in Figures 2 and 3, a robust growth of the ZEV fleet is required. The recent sales data illustrate that without sustained policy incentives, regulatory mandates, and ZEVs priced competitively outside the luxury segment, the ZEV fleet will fall short of targets.

The policy context compounds the challenge. The two most powerful levers supporting ZEV demand growth (the federal $7,500 purchase incentive and the ACC II ZEV sales mandate) were both removed in 2025, and no comparable replacement is currently in place. California retains tools including the Low Carbon Fuel Standard (LCFS), state-level rebate programs, and the ongoing clean vehicle rulemaking process, but none individually or in combination replicates the scale of demand support those programs provided. Without a significant new policy intervention or a structural shift in ZEV economics that brings purchase prices into alignment with mainstream consumer budgets, a return to Scoping Plan-consistent sales growth appears unlikely in the near term.

Stay tuned for the final installment of this series: Part 5 will offer a comprehensive wrap-up of California’s transportation GHG trajectory relative to the 2022 Scoping Plan.