California to Offer $7,500 Rebates for Electric Vehicles
California Governor Gavin Newsom announced on Monday that California will provide its residents with $7,500 rebates for electric vehicles if the federal EV tax credit is eliminated by the incoming Trump administration. There are also discussions about potentially excluding Tesla from this subsidy.
The Trump administration’s transition team has expressed interest in scrapping the federal EV tax credit to cut costs and prioritize other economic initiatives. This move could pave the way for California to step in and incentivize electric vehicle adoption.
2025 Volkswagen ID.4
If the federal tax credit is removed, California plans to revive its Clean Vehicle Rebate Project (CVRP) to offer an equivalent incentive to its residents. The CVRP, which was phased out in 2023, has been successful in promoting the adoption of clean vehicles and reducing fossil fuel consumption.
The proposed rebates aim to promote innovation and competition in the electric vehicle market. Funding for these rebates could come from California’s Greenhouse Gas Reduction Fund, derived from the state’s cap-and-trade program.
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It remains uncertain whether California will impose income qualifications for the rebates. Income and MSRP caps were previously implemented to limit rebates going to high-income individuals. The California Air Resources Board may also expand programs targeting lower-income drivers.
While California is taking proactive steps to incentivize electric vehicle adoption, other states following California’s emission standards may not benefit from similar incentives. The federal tax credit, revamped under the Biden administration, introduced income and MSRP caps to regulate the distribution of rebates.
Despite these changes, the leasing loophole allowing $7,500 rebates for leased EVs remains untouched. This provision, however, may not be replicated by California.
UPDATED 5:45 p.m. to include citations pointing to market share and Musk’s response.