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California Downshifts on Squeaky-Clean Cars

The Golden State's new-car market rose 3% in 2025, but it was the first year since 2020 that zero-emission vehicle registrations declined there.

January 22, 2026
electric vehicle charging in front of ocean view

Toyota was California’s top-selling brand in 2025, followed by Honda, which knocked Tesla down to the third spot.

Credit:

Canva

2 min to read


The California new-car market closed out 2025 on solid footing, according to a report by the California New Car Dealers Association. The data, sourced from Experian Automotive, showed a 3% increase in registrations despite ongoing industry concerns of rising prices, loss of incentives, and economic uncertainty. 

Meanwhile, 2025 marked the first year since 2020 that zero-emission vehicle registrations declined for the green autos-leading state year-over-year. The last two months of 2025 brought the biggest decline in such registrations following a third quarter surge driven by the impending end of the federal electric-vehicle tax incentive. The total fourth-quarter ZEV market share was 20%. 

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It didn't help that Congress last year killed California's ban on the sale of new gas-powered cars, which had been set to take effect in 2035.

But While ZEV sales declined in the state, hybrids had strong year-over-year growth, registrations increasing by more than 30% and accounting for over 19% of the market. But gas-powered vehicles were still the single largest segment, accounting for 54% of all new-vehicle registrations. 

“California continues to lead the nation in vehicle sales and innovation because consumers trust their local dealers,” said Jessie Dosanjh, CNCDA's chairman and owner of Stevens Creek Chevrolet. “This trust is built over time. We help our customers navigate new technology, shifting incentives, and affordability concerns by offering electric, hybrid, and traditional vehicles that fit how Californians live and drive.”

Toyota was the state’s top-selling brand, the Camry the best-selling passenger car in the midsize and large car categories, which Experian lumps into one segment. Honda came in second for brand and model rankings with the Accord in the midsize and large car segment and the Civic leading the small car segment. Tesla dropped to third place in brand ranking, a continuation of a downward trend for the brand. 

The association expects the California new-vehicle market to soften this year with registrations projected to dip due to higher transaction prices, trade tariff pressure, and a cooling labor market. 

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