Increasing numbers of regulatory measures are being introduced worldwide to reduce emissions from the transportation sector. In California, whose low emission vehicle regulations have a leading position worldwide, automobile manufacturers must reduce greenhouse gas emissions of their vehicle fleet (GHG regulations) and sell increasing shares of zero emission vehicles (ZEV regulations). Manufacturers have to pay high penalties in case of non-compliance. A dynamic simulation model examines fundamental automobile manufacturer strategies for compliance. Co-evolutionary development of powertrain technologies, corresponding infrastructure coverage, vehicle types offered, and customer behavior during the adjustment to regulations, is considered. The model is applied to a case study considering the state of California. Results show that meeting requirements necessitates an early introduction of alternative powertrains in many vehicle segments. Feedback between GHG and ZEV regulations necessitates the development of joint compliance strategies. Recommendations are derived concerning appropriate manufacturer strategies for complying with California’s regulations.