Google responded to a webmaster asking if they can use ISO 3166-2 for their hreflang files saying you should probably stick with ISO 3166-1. Google’s documentation specifically says they support ISO 3166-1 and makes no mention of ISO 3166-2.

Google writes in their documentation:

There is no mention of ISO 3166-2, which is why Google is telling webmasters not to use it.

Forum discussion at Twitter.