California New Car Dealers Association Releases Q2 2025 Auto Outlook

Contact: Autumn Heacox, Director of Communications & Marketing: aheacox@cncda.org, (916) 441-2599 x105

Q2 2025 CA Auto Outlook: Tesla Sales Nosedive, Dragging Down ZEV Market
Hybrids Surge, ICE Holds Steady, and Tariff Uncertainty Looms

SACRAMENTO, CA, July 22, 2025— Today, the California New Car Dealers Association (CNCDA) released its Q2 2025 California Auto Outlook Report, analyzing new vehicle registration trends for the first half of the year. All data in the report is sourced from Experian Automotive and must be cited when referencing these findings.

Key Takeaways
Seven appears unlucky for Tesla, as this is the most recent number of quarterly registration declines reported in the state. The electric-only automaker experienced an 18.3 percent drop in registrations compared to the first half of 2024. The direct-to-consumer automaker lacks a robust dealership network for sales support, which may have contributed to a 2.7 point decline in its market share year-to-date, with Q2 alone seeing a 2.9 point decrease. This decline pulled down the overall Zero Emission Vehicle (ZEV) share in the state, which fell to 18.2 percent this quarter and 19.5 percent year-to-date, down from 22.0 percent in 2024.

Alternatively, hybrid vehicles are gaining momentum and paving the way for a cleaner, greener California. Registrations for hybrids have climbed 54 percent so far this year, now accounting for 19.2 percent of the market, totaling 181,192 registrations. Gasoline and diesel vehicles continue to lead, with internal combustion engine (ICE) models making up 57.5 percent of the market.

“Dealers are focused on what Californians are buying, not just what policymakers want them to buy,” said Robb Hernandez, CNCDA Chairman and president of Camino Real Chevrolet. “It’s clear many consumers still face barriers to going fully electric, whether that’s due to affordability, lack of infrastructure, or range anxiety. Dealers are here to help customers find what works for their lives, whether that’s a ZEV, a hybrid, or a traditional gas-powered vehicle.”

ZEV Progress Slows as Policy Clouds Gather
California’s Advanced Clean Cars II (ACC2) regulation, which required 100 percent ZEV sales by 2035, has encountered legal and political headwinds. The rule, set to take effect starting with model year 2026, required each manufacturer to sell 35 percent ZEVs, which would have been a massive long shot considering this quarter’s backslide to just 18.2 percent of ZEV sales (the lowest since Q3 2022).

While the mandate was invalidated earlier this year under the federal Congressional Review Act, litigation from the Newsom administration is ongoing, and the future of ACC2 (or a newly revised version) remains uncertain.

With hybrids gaining popularity and Tesla’s decline dragging down overall ZEV numbers, California policymakers’ ZEV-only strategy may need realignment. Notably, combined alternative powertrain vehicles (hybrid, plug-in hybrid, BEV, and fuel cell vehicles) account for 42.5 percent of new vehicle registrations statewide. Meanwhile, the state’s share of national ZEV registrations remains strong at 28.6 percent.

Brand Market Share and Summary
Toyota continues to lead the California market with a 17.3 percent share, followed by Honda (11 percent), Tesla (8.8 percent), Ford (7.7 percent), and Chevrolet (6.6 percent). Brands showing strong year-to-date growth include Buick, Jeep, Acura, Genesis, Cadillac, Land Rover, and Chevrolet, each posting increases of over 20 percent in registrations compared to the same period last year.

Model Segment Rankings
Top-selling passenger cars so far this year include the Tesla Model 3 with 31,394 registrations (12.6 percent share), followed closely by the Toyota Camry at 30,490 (12.2 percent), and the Honda Civic at 28,531 (11.5 percent).

Leading light truck models include the Tesla Model Y (6.3 percent share), Toyota RAV4 (4.9 percent), and Honda CR-V (4.3 percent).

Regional Variances
Regional data shows steady growth across the state. The San Francisco Bay Area rose 3.4 percent, Los Angeles and Orange Counties climbed 2.3 percent, and San Diego County increased by 2.5 percent. Northern California led the state in BEV share at 23.0 percent, while Southern California held at 20.7 percent.

Statewide Impacts
Despite a strong start to the year, rising tariffs, inflation, and consumer caution may soften California’s automotive outlook for the second half of 2025. Statewide, 944,834 new vehicles were registered during the first half of 2025, marking a 6.6 percent increase over the same period last year. New vehicle registrations were also up 5.5 percent in Q2 2025 compared to Q2 2024. The forecast for total 2025 registrations is 1.72 million, slightly below last year’s 1.75 million total.

Click here to read the full Q2 2025 Auto Outlook Report.

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California Auto Outlook Quarterly is produced for CNCDA by Auto Outlook, Inc., an independent research company that analyzes statewide and regional automotive markets. When reporting these auto industry trends, please acknowledge the Data Source: Experian Automotive.

The report provides comprehensive information on California’s new vehicle market, including annual trends, a two-year perspective, vehicle powertrain dashboard, segment watch, the top five models in each segment, brand scoreboards, regional comparisons, and more. Visit www.cncda.org. 

About CNCDA

For over 100 years, the California New Car Dealers Association has represented California’s franchised new car and truck dealers. CNCDA members are primarily engaged in the retail sale and lease of new and used motor vehicles and provide automotive products, parts, services, and repairs.

In 2024, California’s franchised new car dealers sold more than 1.85 million new and used cars and trucks, employed more than 138,478 people, paid $8.83 billion in sales tax, and donated $70.75 million to charitable and civic organizations. CNCDA is the Nation’s largest state association of franchised automotive dealers, with nearly 1,200 members, and provides legal compliance and legislative, regulatory, and legal advocacy.