New vehicle and dealership laws from 2025

On June 12, 2025, Governor Gavin Newsom signed an executive order doubling down on the state’s efforts to transition away from fossil fuels. This action builds on the lawsuit Governor Newsom and Attorney General Rob Bonta filed on the same day against the Trump administration to protect California’s clean air authority. It also follows the May 2025 announcement that California and 10 other states launched a coalition to continue advancing clean cars.

Newsom’s action comes amidst a backdrop of President Trump’s war on California – a concerted effort by the federal administration targeting the state with its illegal militarization of Los Angeles and anticipated funding cuts.

With this executive order, California will begin work on the next phase of the state’s clean vehicles program, crafting regulations that will continue protecting communities from harmful air pollution while creating jobs and fostering an already dominant clean transportation industry in the state.

The Governor’s order also steers state vehicle purchases to manufacturers that continue to comply with clean vehicle regulations and calls for recommendations on additional actions to further the state’s clean vehicle transition.

In sum, the executive order:

• Reaffirms the state’s commitment to zero-emission vehicle (ZEV) deployment
• Initiates the development of Advanced Clean Cars III regulation to advance new strategies for emissions reduction
• Updates state purchasing requirements to align with manufacturers that continue complying with clean car regulations
• Prioritizes funding for state incentive programs for clean manufacturers and fleets
• Continues Clean Truck Partnership work and requires reports on progress every six months
• Directs state agencies to assess additional actions for ZEV adoption and issue recommendations within 60 days, including strategies for consumer protection, infrastructure, voluntary efforts, and local partnerships

Zero-emission vehicles are often less expensive to operate than their gasoline fueled counterparts due to generally lower electricity prices and minimal costs associated with maintenance and repair over the life of the vehicle.

Action items

None.

What the law currently requires

Existing law requires the State Air Resources Board (“Board”) to adopt and implement motor vehicle fuel specifications for the control of air contaminants and sources of air pollution. Existing law prohibits the Board from adopting any regulation that establishes a specification for motor vehicle fuel unless that regulation, and a multimedia evaluation conducted by affected agencies and coordinated by the state board, are reviewed by the California Environmental Policy Council.

How the bill changes the law

This bill would, notwithstanding the above prohibition, authorizes blends of gasoline containing 10.5% to 15% ethanol by volume - E15 fuel specifically - to be sold in the state for use as a transportation fuel until (1) the California Environmental Policy Council completes its review of those blends and (2) the Board either adopts a regulation establishing a specification for those blends or posts an assessment on its internet website demonstrating that it is not possible for a regulation establishing a specification for those blends to meet specified requirements.

This bill declares that it is to take effect immediately as an urgency statute as part of helping reduce gas prices in the state.

It’s worth noting that the United States Environmental Protection Agency approved the use of 15% ethanol (E15) fuel blends in 2011, based on studies showing E15’s similar or enhanced benefits when compared to E10. Today, 49 states are authorized to use E15. Until passage of this bill, California was the only state where E15 is illegal.

Action items

None.

What the law currently requires

Existing law, the Planning and Zoning Law, requires a city or county to adopt a comprehensive general plan for the city’s or county’s physical development that includes various elements, including, among others, a land use element that designates the proposed general distribution and general location and extent of the uses of the land in specified categories, and a circulation element that identifies the location and extent of existing and proposed major thoroughfares, transportation routes, terminals, any military airports and ports, and other local public utilities and facilities.

How the bill changes the law

This bill, the Local Electrification Planning Act, requires each city, county, or city and county, on or after January 1, 2027, but no later than January 1, 2030, to prepare and adopt a specified plan, or integrate a plan in the next adoption or revision of the general plan, that includes locally based goals, objectives, policies, and feasible implementation measures that include, among other things, the identification of opportunities to expand electric vehicle (“EV”) charging and other zero-emission vehicle fueling infrastructure, as specified, and includes policies and implementation measures that address the needs of disadvantaged communities, low-income households, and small businesses for equitable and prioritized investments in zero-emission technologies that directly benefit these groups. For these purposes, the bill authorizes a city, county, or city and county to designate a previously adopted similar plan that meets the above-described requirements.

The bill deems a plan adopted pursuant to these provisions as a regional plan for specified purposes. The bill requires that the above-described provisions only apply to a city, county, or city and county with a population greater than 75,000 residents.

In essence, AB 39 requires cities and counties to develop comprehensive local electrification plans that expand EV charging infrastructure as well as decarbonize homes and buildings, integrate clean, renewable energy resources to meet growing demand, and protect public health in the face of worsening extreme heat and climate threats.

Action items

None. This bill is part of the state’s movement to advance clean energy transition throughout cities and counties. Included in this movement is the increased use of EVs. As such, the bill requires counties and cities (with populations greater than 75,00 residents) to adopt plans to increase the number of EV charging stations.

What the law currently requires

Existing law, commencing January 1, 2019, made various changes to the law governing ignition interlock devices (“IID”), including, among other things, requiring a person who has been convicted of driving a motor vehicle under the influence of an alcoholic beverage to install for a specified period of time as ordered by the court, an IID on the vehicle they operate, provided however that installation of an IID is discretionary for a first offender; authorizing a person convicted of driving a motor vehicle under the influence, if all other requirements are satisfied, including the installation of an IID, to apply for a restricted driver’s license without completing a period of license suspension or revocation; and requiring ignition interlock device manufacturers to be in compliance with specified provisions relating to payment for the costs of an ignition interlock device.

Existing law makes these changes operative until January 1, 2026. On January 1, 2026, existing law, as it relates to these provisions, is generally reinstated to read as it read prior to January 1, 2019.

Existing law makes it a crime to violate certain provisions relating to IIDs and motor vehicles equipped with IIDs.

How the bill changes the law

This bill extends the operation of these provisions until January 1, 2033, and would instead reinstate the law to how it read prior to January 1, 2019, on January 1, 2033.

In addition, the bill expands the ignition interlock requirements and financial support mechanisms in three major ways:

• Universal Interlock Requirement All DUI convictions, regardless of blood alcohol level or prior record, will require an IID. This change closes gaps that previously allowed certain low-BAC first offenders to avoid interlocks.
• Income-Based State Fees The state will assess installation and monitoring fees based on household income as a percentage of the Federal Poverty Level (“FPL”). For individuals at or below 100 percent of FPL, the state fee is zero. Those between 101 and 150 percent of FPL pay 25 percent of the standard fee; between 151 and 200 percent pay 50 percent; and above 200 percent pay the full fee. Providers will absorb any unpaid balances so that no one is denied a device.
• Pilot Program Permanency and Reporting The existing IID pilot program, which tested income-based fees and universal requirements, will become permanent. The DMV must publish annual reports detailing usage statistics, compliance rates, device reliability, and demographic data to inform future policy decisions.

Action items

If you offer IID installation at your dealership, you should continue to be prepared to install IIDs on vehicles for another six years. Most likely, the time period will be extended again as 2033 approaches. In light of the income-based fees, it is unclear how dealerships will be paid for installation of the IID, if requested. If this is relevant to you and you have questions, speak with your counsel.

What the law currently requires

Existing law requires a parent, legal guardian, or driver who transports a child under 16 years of age on a highway in a motor vehicle to properly secure that child in an appropriate child passenger restraint system or safety belt, as specified. Existing law authorizes a child or ward under 8 years of age who is 4 feet 9 inches in height or taller to be properly restrained by a safety belt rather than by a child passenger restraint system.

Existing law prohibits the operator of a limousine for hire, an authorized emergency vehicle, or a taxicab from operating the limousine for hire, authorized emergency vehicle, or taxicab unless the operator and any passengers 8 years of age or older in the front seat are properly restrained by a safety belt.

Existing law also prohibits a parent, legal guardian, or chartering party from transporting on a bus, or permit to be transported on a bus, a child, ward, or passenger who is 8 years of age or older, but under 16 years of age, unless they are properly restrained by a safety belt, and unless they are acceptably restrained by a safety belt for a child, ward, or passenger who is under 8 years of age and under 4 feet 9 inches in height. A violation of these provisions is an infraction.

Existing law defines, for purposes of the above provisions, “properly restrained by a safety belt” to mean that the lap belt crosses the hips or upper thighs of the occupant and the shoulder belt, if present, crosses the chest in front of the occupant. Existing law defines “acceptably restrained by a safety belt” to mean the latch plate is securely fastened in the buckle, the lap belt is adjusted to fit low and tight across the hips or upper thighs, not the stomach area, the shoulder belt is adjusted snugly across the chest and the middle of the shoulder, away from the neck, and the shoulder belt is not placed behind the back or under the arm.

How the bill changes the law

This bill, commencing January 1, 2027, defines “properly restrained by a safety belt” to mean that the child, ward, or passenger meets the requirements of the “5-Step test,” which includes that the child, ward, or passenger is sitting all the way back against the auto seat, the knees of the child, ward, or passenger bend over the edge of the auto seat, the shoulder belt snugly crosses the center of the child, ward, or passenger’s chest and shoulder, not the child, ward, or passenger’s neck, the lap belt is as low as possible and is touching the child, ward, or passenger’s thighs, and the child, ward, or passenger can stay seated like this for the whole trip.

Action items

If your dealership permits children under 8 to go on test drives with the potential purchaser, be sure that your sales team can answer “yes” to all of these five questions about their seat-belted child passenger:

1. Does the child sit all the way back against the seat?
2. Do the child’s knees bend comfortably at the edge of the seat?
3. Does the belt cross the shoulder between the neck and arm, resting on the collarbone?
4. Is the lap belt as low as possible, touching the thighs?
5. Can the child stay seated like this for the whole trip?

However, best practice would be not to allow children under 8 to ride along on test drives.

What the law currently requires

1. Existing law requires a bicycle operated during darkness on a highway, sidewalk, or bikeway to be equipped with, among other things, a red reflector or a solid or flashing red light with a built-in reflector on the rear that is visible from a distance of 500 feet to the rear when directly in front of lawful upper beams of headlamps on a motor vehicle. Existing law defines “bicycle” for these purposes to, among other things, include an electric bicycle. Existing law defines an electric bicycle as a bicycle equipped with fully operable pedals and an electric motor that does not exceed 750 watts of power and categorizes electric bicycles into 3 classes. A violation of the provisions relating to the requirements for equipping a bicycle or an electric bicycle is punishable as an infraction.
2. Existing law requires a minor to wear a properly fitted and fastened helmet when engaged in specified activities, including operating a bicycle, nonmotorized scooter, or skateboard or wearing in-line or roller skates and requires that the helmet meet the standards of the American Society for Testing and Materials or the United States Consumer Product Safety Commission. Existing law prohibits a record of a violation of those provisions from being transmitted to the court and prohibits the imposition of a fee if the parent or guardian of the minor delivers proof that the minor has a helmet that meets specific standards and has completed a bicycle safety course, as specified. Existing law makes a violation of these provisions an infraction.

How the bill changes the law

1. This bill requires an electric bicycle during <em>all hours</em> to be equipped with a red reflector or a solid or flashing red light with a built-in reflector on the rear that is visible from a distance of 500 feet to the rear when directly in front of lawful upper beams of headlamps on a motor vehicle.
2. This bill, for a violation of these provisions involving an electric bicycle, prohibits a record of a violation from being transmitted to the court and the imposition of a fee if the parent or guardian of the minor delivers proof that the minor has a helmet that meets the specified safety standards and has completed a specialized electric bicycle safety course. The bill also specifies that the specialized electric bicycle safety course developed by the Department of the California Highway Patrol satisfies the requirement that a person complete a specialized electric bicycle safety course.

Action items

If you are a dealership that sells electric bicycles, you must ensure that the bicycles you sell fully comply with the new law.

What the law currently requires

Existing law defines an electric bicycle and classifies electric bicycles into 3 classes with different restrictions. Under existing law, a “class 1 electric bicycle” is a bicycle equipped with a motor that, among other things, provides assistance only when the rider is pedaling and ceases to provide assistance when the bicycle reaches the speed of 20 miles per hour.

Under existing law, a “class 2 electric bicycle” is a bicycle equipped with a motor that may be used exclusively to propel the bicycle and is not capable of providing assistance when the bicycle reaches the speed of 20 miles per hour.

Under existing law, a “class 3 electric bicycle” is a bicycle equipped with a speedometer and a motor that, in pertinent part, provides assistance only when the rider is pedaling, and that ceases to provide assistance when the bicycle reaches the speed of 28 miles per hour.

Existing law prohibits a person from selling a product or device that can modify the speed capability of an electric bicycle so that it no longer meets the definition of an electric bicycle. A violation of the Vehicle Code is an infraction.

How the bill changes the law

The bill is a technical “clean-up” law that strengthens existing rules against modifying e-bikes to exceed legal speed limits. In particular, in addition to prohibiting the sale of a “product or device” that can modify the speed capability, the bill also prohibits a person from selling an “application” that can modify the speed capability of an electric bicycle. The bill does not define “application” however the bill has been interpreted to meaning “smartphone apps” since some apps available on popular platforms like the Apple App Store and Google Play, are able to digitally “unlock” e-bikes and boost speed or power beyond legal thresholds.

Action items

It is unclear how this bill impacts businesses that sell electric bicycles since the customer generally controls his or her smartphone apps. Nevertheless, such businesses should consider warning customers that the subject smartphone apps should not be used. Additionally, if your business sells e-bikes and works with “upfitters” or itself “upfits” e-bikes, care must be taken not to upfit e-bikes with a kit that includes technology or parts to exceed legal speed limits and capabilities.

What the law currently requires

Existing law generally regulates classes of insurance, including automobile liability insurance. Existing law prohibits a motor vehicle, insured pursuant to a policy of automobile liability insurance, from being classified as a common carrier, livery, or for-hire vehicle solely for the reason that the named insured is performing volunteer services for a nonprofit charitable organization or governmental agency consisting of providing social service transportation.

How the bill changes the law

This bill, for purposes of insurance, prohibits a motor vehicle, insured pursuant to a policy of automobile liability insurance, from being classified as a common carrier, commercial vehicle, for-hire vehicle, permissive use vehicle, or livery solely for the reason that the named insured is operating or using the insured motor vehicle to provide public social services, or social service transportation.

Action items

None. The bill is directed at auto insurance companies.

What the law currently requires

Existing law defines an electric bicycle and sorts electric bicycles into 3 classes with different restrictions. Under existing law, a “class 1 electric bicycle” is a bicycle equipped with a motor that, among other things, provides assistance only when the rider is pedaling and ceases to provide assistance when the bicycle reaches the speed of 20 miles per hour. Under existing law, a “class 2 electric bicycle” is a bicycle equipped with a motor that may be used exclusively to propel the bicycle and is not capable of providing assistance when the bicycle reaches the speed of 20 miles per hour. Under existing law, a “class 3 electric bicycle” is a bicycle equipped with a speedometer and a motor that, in pertinent part, provides assistance only when the rider is pedaling, and that ceases to provide assistance when the bicycle reaches the speed of 28 miles per hour. Existing law prohibits a person under 16 years of age from operating a class 3 electric bicycle. A violation of this provision is punishable as an infraction.

How the bill changes the law

This bill would prohibit a person from selling a class 3 electric bicycle to a person under 16 years of age and would make a violation of that prohibition an infraction punishable by a fine not to exceed $250.

Action items

If you are a dealership that sells electric bicycles, you must instruct your sales team that selling a Class 3 electric bicycle to those under 16 years of age is prohibited. The statute does not include an exception for situations when a underage customer presents a fake identification card which shows that he or she is older than 16. This, the law imposes strict liability regardless of whether the dealership or its salesperson knew or should have known the person was under 16. Therefore, sales teams should be instructed to check the presented identification card with the appropriate government agencies to ensure that it is valid. Dealerships should create a written policy and procedure to comply with this law so they can prove they have a system in place to prevent it.

What the law currently requires

Existing law prohibits a person from erasing the reflective coating of, painting over the reflective coating of, or altering a license plate to avoid visual or electronic capture of the license plate or its characters by state or local law enforcement.

Existing law prohibits a person from installing or affixing on a vehicle a casing, shield, frame, border, product, or other device that obstructs or impairs the reading or recognition of a license plate by an electronic device operated by state or local law enforcement, an electronic device operated in connection with a toll road, high-occupancy toll lane, toll bridge, or other toll facility, or a remote emission sensing device, as specified.

Existing law also prohibits the sale of a product or device that obscures, or is intended to obscure, the reading or recognition of a license plate by visual means, or by an electronic device in violation of the above-described provisions. A conviction for a violation of this provision is punishable by a fine of two hundred fifty dollars $250 per item sold or per violation. A violation of the Vehicle Code is a crime.

How the bill changes the law

This bill further prohibits a person from installing or affixing a shade or tint that obstructs the reading or recognition of a license plate by an electronic device operated by state or local law enforcement, an electronic device operated in connection with a toll road, high-occupancy toll lane, toll bridge, or other toll facility, or a remote emission sensing device, as specified. The bill further prohibits the manufacture of these products and devices in the state and imposes a $1,000 fine per item sold or manufactured for a violation of these provisions.

Action items

The bill is self-explanatory and is targeted at vehicle owners. However, some dealers offer for sale or include in the purchase a vehicle license plate surround that advertises the dealership. If your dealership does so, you must be sure that the surround satisfies the requirements of this bill.

What the law currently requires

Existing law generally governs the transactions between a rental car company, also referred to as a rental company, and its customers. Existing law prohibits a rental company from using, accessing, or obtaining any information relating to the renter’s use of the rental vehicle that was obtained using electronic surveillance technology, except under specified circumstances.

Existing law permits a rental company and a renter to limit the responsibilities of a renter in specified events, including loss due to theft of the rented vehicle up to its fair market value, as provided. Existing law establishes, in the situation described in the previous sentence, a presumption that the renter has no liability for loss due to theft if specified conditions are met, including that an authorized driver has possession of the ignition key or establishes that the ignition key was not in the vehicle at the time of the theft, as provided.

How the bill changes the law

This bill allows a rental company to use geofence technology to detect rental vehicle movement in prescribed circumstances. The bill, with respect to the above-described provisions relating to the renter’s liability for loss due to theft, revises the presumption that the renter has no liability for loss due to theft to instead apply this presumption if an authorized driver returns the ignition key.

Action items

Dealerships that provide loaner vehicles to customers are generally not considered rental companies unless they charge a fee, even if nominal, for the service loaner. And if your dealership provides rental vehicle services, it could be considered a rental company under California law. If you charge, even occasionally, for a service loaner or otherwise engage in the practice from time to time of renting vehicles to your customers under a rental car agreement, speak to your counsel about your rights under this new law.

What the law currently requires

Existing law authorizes a rental company, when providing a quote, or imposing charges for a rental, to separately state the rental rate, additional mandatory charges, if any, and a mileage charge, if any, that a renter must pay to hire or lease the vehicle for the period of time to which the rental rate applies, and authorizes the rental company to impose other additional charges.

Existing law prohibits a rental company from charging in addition to the rental rate, additional mandatory charges, or a mileage charge, as those may be applicable, any other fee that is required to be paid by the renter as a condition of hiring or leasing the vehicle.

Existing law requires, if a rental company states a rental rate in print advertisement or in a quotation, the rental company to disclose clearly in that advertisement or quotation the terms of mileage conditions relating to the advertised or quoted rental rate and requires all rate advertisements to include a prominently displayed disclaimer providing that additional specified mandatory charges may be imposed.

Existing law requires rental companies that impose additional mandatory charges to comply with certain requirements, including providing the person receiving the quote with a good faith estimate of the rental rate and all additional mandatory charges, as well as the total charges for the entire rental.

Existing law requires a person or entity other than a rental company, including a passenger carrier or a seller of travel services, to clearly disclose the existence and amount of additional mandatory charges, as applicable, and provides that the rental car company is not responsible for the failure of that person or entity to comply with this provision if a rental company provides the person or entity with rental rate and additional mandatory charges information.

How the bill changes the law

This bill additionally apples the above-described provisions to third parties. The bill also specifies that mandatory third-party service fees are included in the additional mandatory charges that a rental company or third party shall not charge in addition to the rental rate. The bill additionally requires a rental company or third party to provide the total charges estimate for the entire rental, including all taxes and fees imposed by a government, as soon as specified information about the rental is provided to the rental company or third party. The bill requires a rental company or third party to clearly indicate the fuel source of the vehicle prior to completion of a reservation.

This bill instead requires a rental company to provide the person receiving the quote with a total charges estimate of the rental rate and all additional mandatory charges for the entire rental. The bill would also require a third party that imposes additional mandatory charges to comply with specified requirements.

This bill instead provides that, with regard to specified requirements on imposing charges for a rental, a rental company is not responsible for the failure of a third party to comply with those requirements if the rental company provides the third party with information about certain charges, and also that, if a rental company fails to comply with those requirements when providing a third party with information about certain charges or fails to provide the third party with additional mandatory charges and fuel source information along with the rental rate information, the third party is not responsible for that failure.

Action items

Dealerships that provide loaner vehicles to customers are generally not considered rental companies unless they charge a fee, even if nominal, for the service loaner. And if your dealership provides rental vehicle services, it could be considered a rental company under California law. If you charge, even occasionally, for a service loaner or otherwise engage in the practice from time to time of renting vehicles to your customers under a rental car agreement, you should familiarize yourself with the requirements of this new law and speak to your counsel about your obligations under it.

What the law currently requires

Existing law prohibits requiring a person desiring to use an electric vehicle charging station that requires payment of a fee from paying a subscription fee in order to use the station or requiring the person to obtain membership in any club, association, or organization as a condition of using the station.

Existing law authorizes an electric vehicle charging station to offer services on a subscription- or membership-only basis if the station allows nonsubscribers or nonmembers to use the station through a contactless payment method that accepts major credit and debit cards, as specified, and either an automated toll-free telephone number or a short message system (“SMS”) that provides the customer with the option to initiate a charging session and submit payment.

Existing law authorizes the State Energy Resources Conservation and Development Commission (“Commission”), by regulation that is effective no earlier than January 1, 2028, to add to or subtract from those required payment methods.

How the bill changes the law

This bill instead authorizes the Commission to modify, add to, or subtract from those required payment methods, as appropriate in light of changing technologies or cost impacts.

Action items

None. This is yet another attempt by the state to make it easier for EV owners to access EV charging stations.

What the law currently requires

1. Existing law prescribes specified procedures to govern actions seeking the restitution for or replacement of a new motor vehicle, or for civil penalties, pursuant to the provisions of the Song-Beverly Consumer Warranty Act or Tanner Consumer Protection Act. Beginning April 1, 2025, existing law will require the consumer to, prior to seeking civil penalties, provide a written notice to the manufacturer that, among other things, demands the manufacturer’s restitution for or replacement of the consumer’s vehicle.
2. Under existing law, beginning April 1, 2025, a consumer who demands restitution for or replacement of a new motor vehicle may, if specified conditions are met, instead sell the vehicle and seek remedies against the manufacturer, including civil penalties.

How the bill changes the law

1. This bill provides that certain procedures described above would instead become operative on July 1, 2025. The bill specifies that the procedures described above would apply to the manufacturer of a motor vehicle only if the manufacturer elects to be governed by those procedures by reporting the election to the Arbitration Certification Program within the Department of Consumer Affairs. The bill requires a manufacturer that wishes to make this election regarding its motor vehicles sold in the year 2025 and all prior years to make the election within 30 days after the effective date of this bill. Thereafter, the bill requires a manufacturer that wishes to make this election to make an irrevocable election, as specified, regarding motor vehicles sold during the five calendar years following the date of the election. The bill requires the Arbitration Certification Program within the Department of Consumer Affairs, by December 15 of each year, to publish to its website a list of the manufacturers that have elected to be governed by the procedures described above for a period that includes the following calendar year.
2. This bill changes the operative date of that provision to July 1, 2025. The bill prohibits a consumer who sells their vehicle after demanding restitution or replacement from seeking civil penalties unless the consumer provides to the prospective buyer or recipient of the vehicle, prior to the sale, written notice of the consumer’s basis for seeking restitution or replacement and of any pending action against the manufacturer, as specified.

This bill declares that it is to take effect immediately as an urgency statute.

Governor Newsom issued a Signing Statement that can be found here.

To streamline the lemon law litigation process, the California Legislature passed Assembly Bill 1755 (“AB 1755”), signed into law by Governor Newsom on September 29, 2024. (See our previous discussion.)

There are two phases to AB 1755. The first phase began on January 1, 2025. The second phase began on April 1, 2025. In general, AB 1755 introduces new procedural guidelines, including the early exchange of discovery documents, expedited depositions and mandatory mediation all within six months after the answer is filed for those manufacturers who elect to be governed by the new procedures more commonly known as the “opt-in” requirement. When AB 1755 was signed into law, both the Legislature and the Governor made clear that additional legislation would be enacted to modify and clarify several aspects of AB 1755

As promised, the SB 26 was passed by the Legislature and signed into law by Governor Newsom on April 2, 2025, and became effective on July 1, 2025. The intent of SB 26 is twofold. First, it allows manufacturers (especially smaller manufacturers that may find some of the procedures in AB 1755 unworkable or unnecessary to streamline their cases) to continue under the previous procedural rules governing Song-Beverly claims. It accomplishes this by creating an opt-in procedure for those manufacturers who want to be governed by AB 1755. Manufacturers had 30 days from April 2, 2025 to decide whether to opt-in to AB 1755. Once a manufacturer opts-in, they will be required to comply with all of AB 1755 for five years at which point they may opt-in again if they so choose.

Second, SB 26 incentivizes consumers to provide a prospective buyer with information about a current Song-Beverly claim prior to the sale of a used vehicle.

As the bill moved through the legislature, two important revisions were added:

• The effective date of the pre-dispute notice requirement has been changed from April 1, 2025, to July 1, 2025.
  • Language has been added to SB 26 that would allow the legislature, in 2029, to review how AB 1755 is working and for the possibility of the sunset of AB 1755 in 2029 (only if the legislature passed legislation to do so).

For those manufacturers who wish to continue to be governed by AB 1755, they were required to provide written notice to the Arbitration Certification Program within the Department of Consumer Affairs (“Department”) within 30 days of April 2, 2025. Such a notice would inform the Department of the manufacturer’s choice to opt-in and stay under this procedural law. SB 26 also requires the Department to publish an annual list of opted-in manufacturers by December 15 of each calendar year.

As of now, the following manufacturers have opted in: (1) Ford, (2) GM, (3) Stellantis (Chrysler, Jeep, etc.), (4) Hyundai/Genesis, (5) Nissan/Infiniti, (6) Isuzu, (7) Jaguar Land Rover (including Range Rover), (8) Kia, (9) Maserati, (10) Mercedes-Benz, (11) Mitsubishi, (12) Polaris, (13) Subaru, and (14) Vinfast. Thus, dealerships working with these manufacturers will be operating under an entirely new Song-Beverly process starting July 1, 2025.

For those manufacturers who wish to be governed by the previous procedural rules prior to AB 1755, nothing needs to be done. For those that miss the deadline to opt-in, there will be another opportunity at the end of each year to opt-in beginning the following year. As of now the following manufacturers have not opted in: (1) Honda/Acura, (2) Toyota/Lexus, (3) Tesla, (4) Ferrari, (5) Lamborghini, (6) Aston Martin, (7) McLaren, (8) Lucid, (9) Polestar, (10) Porsche, and (11) Rivian.

Action items

AB 1755 and SB 26 are primarily concerned with the manufacturer’s role in defending Song-Beverly claims. However, since dealerships are often included in Song-Beverly lawsuits (for dealership-specific claims), they too may be impacted by the new legislation.

The result of these two laws is that some dealerships must now be prepared to manage two separate Song-Beverly processes, the traditional process for dealerships that sell vehicles by manufacturers who have not opted-in, and the new process for dealerships selling vehicles by manufacturers that have opted in. This dual-track system presents operational and legal challenges that demand clear internal systems and cross-departmental awareness.

Unanswered Legal Questions for Dealerships

Despite the structural date clarity of AB 1755 and SB 26 as they impact consumers and manufacturers, some key issues remain unsettled for dealerships. Among the most pressing are:

• Will dealerships be notified when consumers initiate Song-Beverly claims with opted-in manufacturers?
• Do the new procedures govern dealership-specific claims included in a Song-Beverly lawsuit against the manufacturer? In other words, are dealerships required to participate in early mediation, required document disclosures, and limited discovery?
• Will the claims against the dealership be stayed during the early mediation process required for claims against manufacturers who have opted in?
• Will dealership-specific claims, such as negligent repair or misrepresentation, be covered or released in manufacturer settlements?
• Will dealerships retain indemnity rights and existing legal defenses under the new rules if the claims fail to settle under the streamlined rules?
• How and when will dealerships be included (or excluded) from settlement and release documents?

Many unresolved questions may have significant implications for dealerships. Attorneys representing consumers, manufacturers, and dealerships are actively navigating the current uncertainties. The new laws include a defined timeline but lack clarity on who is responsible for implementation or how it will be carried out. As claims progress, more will be known. Our firm continues to closely monitor developments and provide timely updates to help your team stay informed and in compliance.

What the law currently requires

Existing law provides various provisions applicable to all public transit and transit districts and includes specific requirements applicable to public entities that operate commuter rail or rail transit systems.

How the bill changes the law

This bill prohibits a public entity that owns diesel-powered on-track equipment from selling, donating, or otherwise transferring ownership of that equipment for continued use after the public entity decommissions the equipment. The bill exempts the sale, donation, or transfer of the ownership of that equipment from the prohibition if the equipment is deemed to be in one of specified categories of emissions standards designated by the federal government for locomotives, the equipment produces emissions equivalent to any equipment within any of those federal categories, or the diesel engine is removed from the equipment.

Action items

None. This bill is directed at public entities that own diesel-powered on-track equipment.

What the law currently requires

The Use Fuel Tax Law imposes a state excise tax at specified rates, generally $0.18 per gallon, on the use of fuel, and establishes various exemptions from those taxes, including an exemption for any transit district, transit authority, or city owning and operating a local transit system.

The Diesel Fuel Tax Law imposes taxes at a specified rate with respect to the distribution or delivery of each gallon of diesel fuel, and establishes various exemptions from those taxes, including an exemption for an exempt bus operation that consists of, among other things, a transit district, transit authority, or city owning and operating a local transit system.

How the bill changes the law

This bill additionally applies the above exemptions to a county that owns and operates a local transit system.

Action items

None.

What the law currently requires

Existing law requires the State Air Resources Board (“Board”) to adopt and implement motor vehicle fuel specifications for the control of air contaminants and sources of air pollution. Existing law prohibits the Board from adopting any regulation that establishes a specification for motor vehicle fuel unless that regulation, and a multimedia evaluation conducted by affected agencies and coordinated by the state board, are reviewed by the California Environmental Policy Council.

How the bill changes the law

This bill would, notwithstanding the above prohibition, authorize blends of gasoline containing 10.5% to 15% ethanol by volume - E15 fuel specifically - to be sold in the state for use as a transportation fuel until (1) the California Environmental Policy Council completes its review of those blends and (2) the Board either adopts a regulation establishing a specification for those blends or posts an assessment on its internet website demonstrating that it is not possible for a regulation establishing a specification for those blends to meet specified requirements.

This bill declares that it is to take effect immediately as an urgency statute as part of helping reduce gas prices in the state.

It’s worth noting that the United States Environmental Protection Agency approved the use of 15% ethanol (E15) fuel blends in 2011, based on studies showing E15’s similar or enhanced benefits when compared to E10. Today, 49 states are authorized to use E15. Until passage of this bill, California was the only state where E15 is illegal.

Action items

None.

What the law currently provides

Existing law prohibits requiring a person desiring to use an electric vehicle (“EV”) charging station that requires payment of a fee from paying a subscription fee in order to use the station, or requiring the person to obtain membership in any club, association, or organization as a condition of using the station.

Existing law authorizes an EV charging station to offer services on a subscription- or membership-only basis, if the station provides nonsubscribers or nonmembers the ability to use the station through a contactless payment method that accepts major credit and debit cards, as specified, and either an automated toll-free telephone number or a short message system (“SMS”) that provides the EV charging customer with the option to initiate a charging session and submit payment.

Existing law requires a direct current fast charging station that is first installed or made publicly available on or after July 10, 2023, to also include Plug and Charge payment capabilities, as specified.

Existing law authorizes the State Energy Resources Conservation and Development Commission to add to or subtract from these payment methods by regulation that is effective no earlier than January 1, 2028.

How the bill changes the law

This bill creates an exception to the above-described provisions to authorize an EV charging station to require that payment for charging services be made through the use of an internet-based application if the charging station is on the premises of an arena that has a seating capacity of at least 15,000 seats and can only be accessed through the use of that internet-based application.

Action items

None. Along with AB 1423, this is yet another attempt by the state to make it easier for EV owners to access EV charging stations, specifically at large arenas.

What the law currently requires

Existing law regulates the operation of bicycles, motorized scooters, and electric personal assistive mobility devices, as defined.

Existing law defines an off-highway motor vehicle as a motor vehicle that operates on land, other than a highway, that are open and accessible to the public. Existing law establishes rules for the operation of an off-highway vehicle and imposes specified safety requirements, including, among other things, a requirement that a person operating an off-highway vehicle wear a safety helmet. Existing law requires every off-highway motor vehicle that is not registered under the Vehicle Code to display an identification plate or device issued by the Department of Motor Vehicles, except as specified. A violation of these rules and requirements is a crime.

How the bill changes the law

This bill would define the term “eMoto” as an electric two-wheeled device built on a bicycle infrastructure that does not have pedals or an engine number and is not subject to registration under the Vehicle Code.

The key effect of SB 586 is to bring eMotos under the legal umbrella of “off-highway motor vehicles.” This reclassification has far-reaching consequences. Once considered unregulated or ambiguously defined, these vehicles would now be subject to all the rules and responsibilities of off-highway vehicle use. This includes requirements such as:

• Helmets for all riders.
• Operation only in areas designated for off-highway vehicle use.
• Display of appropriate identification plates issued by the Department of Motor Vehicles.
• Adherence to safety and noise standards set by California law.

This change means riders would no longer be able to operate eMotos on sidewalks, in bike lanes, or on public roads unless specifically authorized. The goal is to keep these vehicles in appropriate environments—primarily dirt trails, open spaces, and OHV (off-highway vehicle) parks—where their use is safer and less disruptive to others.

Action items

Businesses and dealerships that sell eMotos should familiarize themselves with the new bill to ensure compliance, particularly regarding issuance of license plates from the DMV. If you are unsure of your legal obligations, contact your counsel.

In a move that could significantly impact the auto retail industry, California has passed Senate Bill 766, known as the California Combating Auto Retail Scams (“CARS Act” or “Act”). In general, the bill aims to impose stringent new regulations on auto dealers in the state, many of which regulations echo back to the Federal Trade Commission’s (FTC) own CARS Rule.

The bill will make it a violation of the Act for a dealer to make any misrepresentation regarding material information about specified matters relating to the vehicle sale, including the costs or terms of purchasing, financing, or leasing a vehicle, the availability of vehicles at a total price communicated by the dealer, and the remedy available if a dealer fails to sell or lease a vehicle at the total price, as defined. The bill will also make it a violation of the Act for a dealer to fail to make certain disclosures clear and conspicuous, including specified information relating to the total price and any add-on products or services, and would exempt from that provision a used vehicle sold at an auction, as defined. Violations of the CARS Act will be enforced through existing statutory tools such as the Consumers Legal Remedies Act (CLRA) and the Unfair Competition Law (UCL), since the Act provides additional protections but does not create a standalone private right of action.

It will also be a violation of the Act for a dealer, in connection with the sale or financing of a vehicle, to charge for certain items, including an add-on product or service if the vehicle purchaser or lessee would not benefit from the add-on product or service. The bill would require a dealer to create and retain, for a period of 2 years from the date the record is created, all records necessary to demonstrate compliance with the act, including specified records.

While the CARS Act does not provide remedies for violations of the Act, violations of the Act will give rise to claims under the Consumer Legal Remedies Act and the Unfair Competition Law.

The CARS Act goes into effect on October 1, 2026, and there are several notable changes to existing law that dealers need to be aware of before the CARS Act becomes operative.

Disclosure of Total Price

What the law currently requires

Dealers are obligated to comply with extensive advertising laws such as Vehicle Code section 11713.16 and the federal Truth in Lending Act (12 CFR Part 1026 [Regulation Z]).

How the bill changes the law

The CARS Act requires car dealers to clearly display a vehicle’s total price, which is the full selling price including all mandatory dealer-installed items and non-optional features, but excluding taxes and government fees. Dealers can’t advertise prices that subtract rebates or discounts not available to every buyer, and they must avoid misleading information about add-ons or financing. The goal is to make car pricing more transparent and prevent deceptive advertising. This new “total price” disclosure requirement will officially take effect on October 1, 2026.

The total price disclosure must be made: (1) in the dealership’s first communication with a customer regarding a specific vehicle; (2) in any advertisement that references, expressly or by implication, a specific vehicle for sale; and (3) in any advertisement that represents, expressly or by implication, any monetary amount or financing term for any vehicle.

Dealers must maintain a copy of advertising and also the first written communication with disclosure for at least 2 years and provide it to consumers upon request.

Dealers must disclose and retain the advertised price, in writing, when responding to inquiries, and if the inquiry itself is in writing, the advertised price must also be disclosed in writing.

The Act mandates that required disclosures (including total price) must be made clearly and conspicuously. The Act defines “clear and conspicuous” or “clearly and conspicuously” as in a manner that is difficult to miss and easily understandable, including in all of the following ways: if the communication is solely visual or solely audible, the disclosure must be made via the same means through which the communication is presented.

Thus, the total price disclosure must be prominent, understandable, not hidden in fine print, and communicated in the same medium (ad, email, text) as the rest of the communication.

The Act also ties in related disclosures that connect to total price and payment terms. For example, if the dealer makes any representation about a monthly payment, the dealer must disclose clearly and conspicuously in writing the total amount the consumer will pay to purchase or lease the vehicle at that monthly payment. If a lower monthly payment option is shown, the dealer must disclose that the lower monthly payment may increase the total amount the consumer will pay.

Cooling Off Period

What the law currently requires

2-day optional right of cancellation on used vehicles.

How the bill changes the law

The Act imposes a mandatory 3-day cooling off period for used cars under $50,000. Dealers must provide a document titled “3-Day Right to Cancel Used Car Purchase or Lease” for qualifying transactions. This document must include specific disclosures, such as: (1) the buyer's right to cancel within three days; (2) conditions under which the right to cancel applies; (3) details about the restocking fee and any additional charges; and (4) the dealer's obligations regarding trade-in vehicles upon cancellation. These disclosures must be provided in writing and clearly and conspicuously to the buyer in the sales contract. The Act also requires specified signage advising customers of the 3-day right to cancel.

If the buyer cancels the purchase within the 3-day period, the used car that was purchased must be returned to the dealer with under 400 miles driven, and the dealer can inspect the returned trade-in for damage beyond normal use and may adjust the return or assess compensation if the car’s value has been affected.

The dealer must also return any trade-in vehicle that the buyer traded in as part of the deal. If the trade-in is sold or resold by the dealer before the buyer cancels the used car purchase. Under the new California rules dealer has to give the greater of: (1) the agreed-upon value of the trade-in vehicle as stated in the sales or lease agreement; (2) the amount for which the dealer sold the trade-in vehicle; or (3) the fair market value of the trade-in vehicle at the time of cancellation.

Additionally, if the dealer claims to have sold the trade-in vehicle, they must provide the buyer with a copy of the document showing the sale, with personal information redacted

Dealers may charge a restocking fee if the buyer exercises the right to cancel, which only applies to the purchased used car, not the trade-in. The fee is calculated as 1.5% of the vehicle's purchase price, with a minimum of $200 and a maximum of $600. Additionally, if the vehicle has been driven more than 250 miles, dealers may charge $1 for each mile over 250, up to an additional $150.

Record Retention

What the law currently requires

The DMV has adopted regulations related to the purchase, sale and, rental, or lease of vehicles. These regulations require dealers to retain records for three (3) years and to retain physical copies of the documents for 90 days at its principal place of business. After the initial 90 days dealers may store the records electronically or offsite. However, the Automobile Sales and Finance Act requires dealers to retain documents related to vehicle sales to be retained at least seven years or the length of the conditional sales contract, whichever is longer. (See Civ. Code, § 2984.5)

How the bill changes the law

The CARS Act adds an additional mandate to create and retain records that demonstrate compliance with the Act for two years. Specifically, dealers are required to retain:

1. Records demonstrating that communications and advertisements of vehicle’s total price, including print ads, online ads, website listings, third-party sites, radio and television ads, and display or lot signage (Vehicle Code § 11713.1 and § 11713.16 as amended by the CARS Act)
2. First written communication with each customer, including emails, text messages, direct messages or website chats, printed or handwritten quotes (Vehicle Code § 11713.1 and SB 766 § 2(b)(3)).
3. Pre-contract disclosure documents (negotiation stage), including add-on products disclosure, payment comparison disclosure, monthly payment cost disclosure, and trade-in/down payment summary. (Vehicle Code § 2982.2 as amended by CARS Act).
4. Language of negotiation materials, Spanish/other language versions of disclosures, customer acknowledgment of language provided. (Civil Code § 1632 and Vehicle Code § 2982.2).
5. Sales contract and deal jacket documents, including conditional sales contract (retail installment sale contract), signed disclosure documents (add-ons, payment comparisons, monthly payment totals), copy of total price sticker or supplemental label. (Civil Code § 2981 <em>et seq</em>. and Vehicle Code § 11713.1(a)).
6. Copies of all cancellation requests, proof of refunds of downpayments or other consideration provided in the purchase of a vehicle and proof of return of trade-in vehicles.
7. Copies of all written complaints sent by car buyers or lessees to the dealer relating to sales, financing, leasing or cancellation requests.

Action items

The CARS Act will officially take effect on October 1, 2026 and, as noted above numerous changes will be implemented regarding how auto dealers sell, advertise, and document vehicle sales, as well as, post-sale obligations concerning representations about certain subjects. Important changes include prohibitions on dealers making misleading statements on aspects of the sale or lease of vehicles. Also, specific vehicles must have clear and conspicuously disclosed prices in advertisements, including consumers’ inquiries. The CARS Act also focuses on limiting the sale of add-on products and services that provide no real benefit to consumers. It also replaces the current contract cancellation option with a mandatory “3-Day Right to Cancel.” Finally, the CARS Act imposes strict two-year recordkeeping obligations regarding advertisements, communications, contracts, cancellation requests, and written complaints received.

All sales team members must become fully versed on all aspects of the CARS Act to ensure compliance once the law goes into effect on October 1, 2026.

We and the CNCDA and your compliance vendors will be providing further guidance on this Act throughout the year. Be on the lookout for it, as this is a massive change from how you have been doing business and will require several changes in documentation, process and procedure and record retention.

What the law currently requires

Existing law, the Automotive Repair Act (“Act”), provides for the registration and regulation of automotive repair dealers by the Bureau of Automotive Repair in the Department of Consumer Affairs (“BAR”). A violation of these provisions is a misdemeanor unless otherwise specified.

Existing law authorizes the Director of Consumer Affairs (“Director”) to adopt and enforce those rules and regulations that the director determines are reasonably necessary to carry out the purposes of the Act and declare the policy of the bureau. Existing law authorizes the Director to include in the citation system a process for informal review of and recommendation on citations. Existing law subjects the BAR to review by the appropriate policy committees of the Legislature and requires that review to be performed as if the Act were scheduled to be repealed on January 1, 2028.

Existing law authorizes the Director to include in the citation system a process for an automotive repair dealer to prevent disclosure of the citation on the internet and subject to a certain eligibility requirement.

Existing law also authorizes the BAR to require any employee of the automotive repair dealer who was involved in the violation resulting in the BAR’s issuance of the citation to attend remedial training with the automotive repair dealer to prevent disclosure of the citation.

Existing law repeals these provisions on July 1, 2026.

How the bill changes the law

This bill extends the effective date of these provisions until January 1, 2028.

Action items

None since the bill merely extends the effective date of existing laws relating to the BAR.