With the federal $7,500 EV tax credit gone, California is turning to a state-run incentive that could lower a qualifying vehicle's purchase price by several thousand dollars right at the dealership.
That immediate discount could matter for buyers who have been waiting for electric vehicle prices to come down, reported the Desert Sun.
What's happening?
If automakers match the state money as expected, the total available support would top $270 million.
Gov. Gavin Newsom's budget allocates $135 million for a rebate program for Californians buying their first new or used EV.
Rather than showing up at tax time, the benefit would be applied to the price at the dealership.
Under the legislation creating the program, eligible buyers could receive $3,500 off a new EV or $1,750 off a used one.
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Backers say the proposal could help California's EV market keep its momentum after the federal incentive expired in September 2025, creating a major gap for both buyers and automakers.
Mike Murphy, CEO of the American EV Jobs Alliance, said, "$135 million for first-time EV buyers, matched dollar-for-dollar by automakers, adds up to more than $270 million in welcome help for new EV buyers."
Why does it matter?
Roughly one-third of EV sales in the U.S. occur in California, where electric and hybrid vehicles accounted for about 24% of new light-duty registrations in 2025.
California says more than 2.5 million zero-emission vehicles have been sold in the state since 2010, but demand has softened as federal support has shrunk.
The rebate program is part of the state's effort to stay on course with broader clean-car goals, including ending sales of new gas-powered vehicles by 2035.
What's being done?
To qualify, new EVs would need an MSRP of $50,000 or less and used ones a sale price of $25,000 or less.
Buyers would also have to certify that they have never owned a zero-emission vehicle, since the program is intended for first-time EV purchasers.
Vehicle price would not matter for buyers choosing brands headquartered in California, a provision that could help companies such as Rivian and Lucid. Tesla, however, would not qualify for that exemption because it is based in Austin, Texas.
Before the rebates can begin, the California Air Resources Board still has to finalize details with dealerships, with the rollout expected in the coming weeks.
California Air Resources Board Chairwoman Lauren Sanchez called EV adoption a "point of pride in California," per the Desert Sun.
Murphy added, "This legislation will fund a $3,500 cash-on-the-hood credit for tens of thousands of first-time EV buyers in the Golden State."
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