Toyota Motor sounded an alarm on Friday that the electric vehicle (EV) regulations led by California, set to take effect next year, are “impossible to meet” and, if unchanged, will lead to fewer vehicle options for consumers in multiple states.
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According to the California Air Resources Board’s (CARB) “Advanced Clean Cars II” regulation, 35% of 2026 model vehicles – which will start being introduced next year – are required to be zero-emission vehicles (ZEVs). This includes battery-electric, fuel cell, and some plug-in hybrid electric vehicles. This ambitious goal has raised concerns that it may exceed the capabilities of automakers at present.
Jack Hollis, Chief Operating Officer of Toyota Motor North America, stated during a virtual media roundtable, “I have not seen any forecast, from the government or private sectors, indicating that this target is achievable. At this point, it seems impossible.” Hollis emphasized that the demand for EVs is still insufficient to meet this target, and it would restrict consumer choice in terms of the vehicles they want.
The Wide Impact of EV Regulations
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CARB’s regulations not only affect California but extend to 12 other states and Washington, D.C., which have adopted similar laws, with some states starting from 2027. CARB’s ultimate goal is for 100% of new vehicle sales in California to be zero-emission by 2035. However, adoption rates in other states are still low. According to J.D. Power data, only California (27%), Colorado (22%), and Washington (20%) currently have more than 20% of retail sales as EVs or PHEVs this year. Other states, like New York (12%), New Mexico (5%), and Rhode Island (9%), are far from compliant.
Notably, the national average of EV/PHEV retail sales is only about 9% this year as of October, according to J.D. Power. This demonstrates that California’s goals are moving faster than the real market demand.
Negative Impact on the Automotive Industry
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According to Hollis, if the regulations remain unchanged, the automotive industry will face “unnatural shifts,” as automakers must disproportionately supply electrified models to states that adhere to the mandate, even when market demand does not align. He emphasized, “This will distort the industry, distort the market, because it’s unnatural compared to what the current demand is.”
These pressures do not just affect Toyota but also ripple across the industry, as other automakers must shift and adapt production to meet regulations without a stable demand base. Some industry insiders told CNBC that, regardless of who won this year’s election, the EV mandate issue would need to be addressed.
The Battle Over Emission Standards
In President Donald Trump’s first term, a legal battle ensued to revoke states’ rights to set their own emission standards. Officials expect that Trump will renew this push if he returns to the White House, which could worsen tensions between California and the federal government.
Hollis said he hopes it will not come to legal confrontation this time and that the states, federal government, and the auto industry can find a solution. He also emphasized that Toyota would prefer a national standard for all states, as this would allow manufacturers to treat all consumers and dealers fairly across the US. Hollis added, “We would always want a 50-state rule, because that way we can treat all customers, all dealers, equally, no matter what the rule might be.”
Challenges in Achieving Zero-Emission Goals
Achieving the 35% target by 2026 and the further goal of 100% by 2035 requires a multitude of factors. Experts point out that to reach this level of EV adoption, not only must production increase, but significant investments in charging infrastructure, EV maintenance support, and customer education are also essential. The shift from gasoline-powered to electric vehicles is a complex process that demands close collaboration among governments, manufacturers, and consumers.
Hollis expressed, “Our hope is that California and the [Environmental Protection Agency – EPA] can align and reduce the requirements to an achievable level. Even if it’s a push, even if it’s a stretch, but at this stage, the current requirements are impossible.”
While there is broad support for environmental protection, Toyota and other automakers warn that without reasonable adjustments, strict EV mandates will have significant negative consequences on the industry and on consumer choice.
The Future of the Automotive Industry and Consumer Choice
California’s stringent regulations could lead some traditional vehicle models to disappear from the market, limiting options for consumers. These vehicles are typically suitable for a diverse range of customers and designed to meet various needs, from individuals to families. The absence of such models could lead to higher vehicle costs, impacting affordability for many Americans.
The transition to electric vehicles is a commendable goal but must be implemented gradually, strategically, and in line with real demand. Automakers like Toyota hope that lawmakers and policymakers will listen to input from businesses and communities to build a sustainable and equitable path forward for everyone.
