Ford Faces Major Obstacles With Forthcoming U.S. ZEV Mandates

The state of California has long sought to set its own emissions standards that include banning the sale of new ICE-powered vehicles by 2035, and has been fighting a legal battle for years over that same topic. Under former President Joe Biden, the Environmental Protection Agency (EPA) grated it that right following a decision by the Supreme Court that allows the state to set its own emissions standards late last year, but it’s possible that current President Donald Trump may wind up rescinding the waiver. Meanwhile, automakers like Ford face some major obstacles if these zero-emissions vehicle (ZEV) mandates do ultimately stick.

If nothing changes, California’s Advanced Clean Cars II regulation is set to begin taking effect this year in that state, as well as five others – Vermont, New York, Washington, Oregon, and Massachusetts – requiring that 35 percent of vehicles produced and delivered to those places by automakers be zero-emission vehicles starting with the 2026 model year, according to Automotive News. For the 2027 model year, those states will be joined by the District of Columbia and Colorado, Delaware, New Jersey, New Mexico, and Rhode Island.

Currently, California has the largest EV market share of the bunch at 20 percent, meaning that each has a lot of ground to make up in a short period of time. For automakers like Ford, failing to reach those goals will result in stiff fines as high as $20,000 per noncompliant vehicle, which means that some companies are already ramping up EV and PHEV inventory and cutting back on ICE/standard hybrid deliveries. With each passing year, ZEV mandates increase by eight percent until they reach 100 in 2035.

Trouble is, automakers and dealers are concerned that allocations will become skewed as a result of these mandates, meaning that customers will also be rather limited in terms of what models they’ll be able to purchase. This is due to the fact that automakers will prioritize ZEV deliveries to states with mandates, making it more difficult to purchase such vehicles in other states. On top of that, customers in states with ZEV mandates may simply not be able to order an ICE vehicle at all, if it impacts a company’s mix negatively.

“It’s stating the obvious, but allocation is extremely important. It really boils down to, if you can get the vehicles that your buyers and consumers want at a point in time, you win,” said independent auto analyst Jeff Schuster. “Dealers want to do whatever they can to earn what’s hot, or what’s being marketed really well. It’s not just about what people are coming in to ask about, it’s anticipating what your customers will want. You want to be the dealer who’s on that list to get what you want when you want it.”