A new storm is brewing in the American auto industry—and it has nothing to do with tariffs or international trade disputes. Instead, the crisis centers on California’s Advanced Clean Cars II (ACC II) program, a regulatory push that will force automakers and dealers to radically reshape the types of vehicles they sell, beginning with the 2026 model year. The rules don’t just affect California. Oregon, Washington, New York, Vermont, and Massachusetts have also signed on, and the impacts are rippling across the industry from coast to coast.
This article breaks down what ACC II demands, why it’s causing panic among retailers and manufacturers, and what comes next as the deadline for compliance draws near.
What ACC II Demands from Automakers and Dealers
The heart of ACC II is a stepwise mandate requiring that a growing percentage of all new vehicles sold must be zero-emission—either electric or (to a lesser extent) plug-in hybrids. The threshold starts at 35 percent of sales for model year 2026 and ratchets up by 8 percentage points each year, reaching a full 100 percent by 2035.
Failure to comply carries real financial risk: automakers and dealers could be hit with penalties of up to $20,000 per noncompliant vehicle sold.
Why the Industry Is Struggling to Keep Pace
While these requirements reflect California’s unique mix of geography, infrastructure, and consumer demand, other states lack the same readiness. Dealers in the West are moving faster, but sales in Northeastern states remain far below targets. Nationwide, EVs and plug-in hybrids have yet to capture enough market share, leaving a yawning gap between regulatory targets and consumer demand.
The result? Manufacturers and dealers are scrambling to find ways to avoid penalties. Some are calling for a pause or delay in enforcement, while others openly discuss shifting inventory and allocation strategies to minimize their exposure.
Potential Industry Fallout and Responses
ACC II is set to become the next pain point in the retail auto sector, forcing companies to make unprecedented changes. If demand fails to meet the required quota, some manufacturers may restrict shipments of gasoline vehicles, reshuffle inventory between compliant and non-compliant states, or even accept penalties as a cost of doing business.
Retailers are concerned about having to stock vehicles they can’t sell, while consumers worry about fewer choices and higher prices—particularly in regions where EV infrastructure and incentives lag behind California’s.
Looking Ahead: The Countdown to Compliance
With the first threshold only months away, automakers, dealers, and state policymakers are under intense pressure to find workable solutions. Whether the industry will be able to adapt in time—or if a last-minute regulatory pause will be granted—remains an open question.
What’s clear is that the ACC II zero-emission mandate is no longer just a California story. For much of the American auto industry, it’s shaping up to be the next great challenge, demanding flexibility, innovation, and a lot of high-stakes problem-solving from every corner of the business.
