Hybrid market share climbs to highest level on record in California

The state’s new point-of-sale rebate program, MyFirstEV, is expected to be implemented in the coming weeks, which could provide additional momentum

Sacramento,Calif.—The California New Car Dealers Association (CNCDA) has released its Q2 2026 California Auto Outlook report, providing a first-half 2026 analysis of statewide new vehicle registration trends.

Key Takeaways

California’s new vehicle market declined 7.7 percent through the first six months of 2026, with 864,848 new light vehicles registered compared with 936,543 during the same period in 2025. The U.S. market fell 2.8 percent. The rate of decline eased as the year progressed. Registrations fell 9.1 percent in the first quarter and 6.3 percent in the second.

Statewide registrations are projected to reach 1.73 million units for all of 2026, down 3.9 percent from 2025. Elevated transaction prices, relatively high interest rates, and stagnant personal incomes continue to weigh on affordability, while pent-up demand from purchases delayed during the pandemic places a floor under the market.

Drivetrain Update: Hybrids Reach Their Highest Share on Record

Hybrid vehicles accounted for 22.1 percent of California’s new vehicle market through June, the highest share in the report’s data series and up from 19.5 percent for all of 2025. Hybrid share has now increased in each of the past four years. Quarterly share climbed from 20.9 percent in the first quarter to 23.2 percent in the second.

Hybrid registrations totaled 191,000 units in the first half of the year, and every one of those vehicles was sold through a franchised new car dealership. Franchised dealerships accounted for 75.7 percent of combined hybrid, ZEV, and plug-in hybrid registrations statewide.

Gas powered vehicles remained the largest single segment of the market at 57.6 percent of registrations, up from 54.0 percent in 2025.

ZEV Market Shows Signs of Stabilizing

ZEV registrations declined 24.8 percent in the first half of 2026 compared with a year earlier, falling to 137,430 units. ZEV market share was 15.9 percent through June.

The quarterly trend points to a possible floor. ZEV share fell from 24.9 percent in the third quarter of 2025, before the federal tax credits expired, to 13.8 percent in the first quarter of 2026. It then recovered to 17.8 percent in the second quarter.

California continues to lead the nation on electric vehicle adoption by a wide margin. The state’s ZEV share of 15.9 percent was nearly three times the U.S. figure of 5.9 percent, and California accounted for 29.1 percent of all ZEV registrations nationwide.

While ZEV sales for the remainder of 2026 are expected to remain at roughly current levels, the state’s new point-of-sale rebate program, MyFirstEV, is expected to be implemented in the coming weeks, which could provide additional momentum for ZEV sales. 

“Californians are buying the vehicles that fit their budgets and the way they drive, and right now that means a lot of hybrids,” said Jessie Dosanjh, Owner of Stevens Creek Chevrolet and CNCDA Chairman.

“Every hybrid registered in this state came through a franchised dealership. When a customer needs to compare options, work out financing, and know the vehicle will be serviced for the next 10 years, they come to their local dealer. We support any rebates or state incentives that help buyers and move the market forward,” said Dosanjh.

Electric Segment Narrows

Tesla registrations rose 11.8 percent in the second quarter to 45,953 units, though year-to-date registrations remain down 6.5 percent. Tesla accounted for 56.7 percent of California ZEV registrations through June, up from 45.6 percent a year earlier, as competing electric-only brands posted steeper declines.

Model Rankings

The Toyota Camry was the top-selling passenger car in California with 33,527 registrations, capturing 55.2 percent of the midsize and large car segment. The Honda Accord followed with 15,933 registrations (26.2 percent). The Honda Civic led small cars with 27,897 registrations, or 32 percent of the segment.

The Tesla Model Y remained California’s top-selling model overall with 54,327 registrations, accounting for 57.5 percent of the luxury compact SUV segment. The Honda CR-V led compact SUVs with 27,670 registrations at 19.3 percent.

Pickup truck demand held steady. The Toyota Tacoma led compact and midsize pickups with 24,254 registrations at 52.3 percent. The Ford F-Series topped full-size pickups with 18,654 registrations at 28.1 percent.

Brand Performance Highlights

Five of the top 30 selling brands recorded registration increases through June were Lucid, Volvo, Chrysler, Genesis, and Toyota.

Toyota finished the first half as California’s top-selling brand with 19.0 percent market share, up from 17.4 percent a year earlier. Honda followed at 10.9 percent and Tesla at 9.0 percent.

Regional Markets

Northern California new retail registrations, which exclude fleet sales, fell 10.2 percent to 249,172 units. Passenger cars declined 14.5 percent, and light trucks fell 8.7 percent. ZEVs accounted for 20.4 percent of the Northern California market.

Southern California retail registrations declined 7.6 percent to 492,966 units. Passenger cars fell 11.5 percent, and light trucks declined 6.1 percent. ZEVs represented 16.1 percent of those registrations.

Among individual markets, the San Francisco Bay Area posted the steepest decline at 12.7 percent, followed by Los Angeles and Orange counties at 9.0 percent and San Diego County at 8.9 percent.