- Unlike an early proposal, the new EV incentive will include several Tesla models.
- Passenger vehicles priced at or below $55,000 in the state will be eligible.
- State needs to finalize details for the new program, but it will commit $200M.
The federal EV tax credit is no more, but California is stepping in with a plan to keep momentum alive in the country’s largest EV market. Governor Gavin Newsom has outlined a new set of state-level incentives aimed at first-time EV buyers, designed to pick up where the now-defunct federal tax credit left off.
However, the proposal rules out any repeat discounts for those who already own an electric vehicle, limiting eligibility to newcomers.
Read: Trump Killed The Federal EV Credit, So California Wrote Its Own
The initiative, which still requires approval from state lawmakers, would set aside $200 million. Under the current framework, passenger EVs priced at or under $55,000 would qualify, while vans, SUVs, and pickup trucks with a starting price below $80,000 would also be eligible.
Who Gets What and When?
California has yet to confirm the value of each incentive. What we do know is that the policy would require manufacturers to match the state’s contribution dollar-for-dollar. Like the old federal tax credit, the incentives will be offered immediately at the point of sale and will apply to new EVs purchased or leased. Additionally, Bloomberg reports there will be incentives for used EVs priced below $25,000.
Sarah Swig, a senior climate advisor to Governor Newsom, criticized the rollback of federal support. “The Trump administration’s reckless retreat has created unprecedented uncertainty for automakers and families alike,” she said.
“California is proud to partner with automakers who are committed to the transition to a zero-emission future through shared investment to keep costs down and drive the market forward.”
Expanding the EV Base
According to a spokesperson from the California Air Resources Board, limiting eligibility to first-time EV buyers will help to expand the market, “introducing new consumers to ZEV technology.” CARB added in a statement to InsideEVs that “research shows that once consumers make the switch to ZEVs, they typically don’t go back to dirty gasoline or diesel vehicles.”
In late 2024, Governor Gavin Newsom presented his first proposal for a new EV subsidy scheme in the state, in response to President-elect Trump’s threat to repeal the federal program. Newsom’s proposal would have excluded EVs from Tesla, which quickly drew the ire of Elon Musk. As part of the latest proposal, many Tesla models would be eligible.
