California is introducing an instant rebate for residents getting their first electric vehicle as gas prices climb and federal EV tax credits are no longer available.
State officials are betting that lower upfront costs could make EVs more attractive to drivers frustrated by expensive trips to the pump.
What happened?
Beginning next month, the MyFirstEV program will provide eligible Californians with $3,500 off a new EV or $1,750 off a used one, the Los Angeles Times reported. The offer is for people buying or leasing their first EV.
California launched the effort after the Trump administration ended the $7,500 federal credit for new EVs in September. State officials say that change caused a short-lived slowdown, but higher gasoline prices have since helped revive demand.
Between April and June, Californians bought 86,857 new zero-emission vehicles, according to the California Energy Commission, including 75,597 EVs. Those vehicles made up 19.1% of the state's new-car market, 3.3 percentage points higher than in the first quarter.
Gil Tal, director of the Electric Vehicle Research Center with UC Davis, said rising fuel prices can quickly change buying behavior: "At $5.77 a gallon, the operating-cost math swings decisively to the EV, about $125 a month for a typical driver, and buyers acted on that price signal within weeks."
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Why does it matter?
For many households, the biggest obstacle to switching from gas to electric is the upfront price. EVs often cost more upfront than comparable gas-powered cars, even if they save drivers money over time on fuel and maintenance.
The rebate could be especially important for moderate-income buyers who were interested in going electric but struggled with the initial cost. The discount is applied at the time of purchase rather than arriving later as a tax credit.
Tal warned that supply is a major issue.
He said, "We have no supply because we have no regulation that forces supply."
He added that automakers have started "backpedaling" after federal policy changes weakened pressure to keep expanding EV lineups.
Jeremy Michalek, who leads Carnegie Mellon University's Vehicle Electrification Group, said the recent sales growth does not necessarily mean attitudes changed overnight: "It's not that people started liking electric vehicles more. ... It's because electric vehicles kept getting better and cheaper."
What's being done?
Gov. Gavin Newsom signed Senate Bill 168 this month, setting aside $135 million for MyFirstEV. Thirteen automakers — Tesla, Toyota, Ford, General Motors, Honda, Hyundai, Kia, Lucid, Mitsubishi, Nissan, Rivian, Subaru, and Volvo — are expected to match that funding.
To get the rebate, Californians must be acquiring their first EV and verify that through an attestation. New models qualify only if their MSRP is $50,000 or less, while used ones must cost no more than $25,000 and be sold through a manufacturer's pre-owned program.
One exception removes those price caps for vehicles from California-based automakers, including Lucid and Rivian.
Michalek said the program could help in two ways: It may encourage more new EV production while also making used EVs attainable for buyers who were previously priced out. He added that backing used EVs also speaks to equity concerns so the benefits do not go only to higher-income households.
"While Donald Trump makes Americans pay the bill for his Iran war at the pump, California is giving families the freedom to choose a cheaper way forward by going electric," Newsom said.
For Tal, the financial argument is straightforward: "At $5.77 a gallon, the operating-cost math swings decisively to the EV."
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