Gov. Gavin Newsom’s office unveiled details about reviving California’s rebate program for zero-emission vehicles. It includes providing a dollar-to-dollar match between the state and automakers, plus extending the plan to include used vehicles.
The proposed incentives, however, would be restricted to first-time buyers.
The Newsom administration on Monday released language for a trailer bill — legislation tied directly to the annual state budget — regarding the Democrat’s proposal to set aside $200 million to fund the new program.
The language calls for the California Air Resources Board to enter into grant agreements with automakers to “provide incentives for consumers” to buy or lease light-duty passenger electric vehicles “at the point of sale.” Participating manufacturers will match the state’s contributions on a one-to-one basis.
Incentives would also apply to used EVs — but only for their purchase, not for leasing them.
Eligible vehicles include those priced at or below MSRP, the manufacturer’s suggested retail price, as specified by the federal government’s 2022 Inflation Reduction Act signed into law by then President Joe Biden.
Those price caps are $55,000 for new passenger vehicles; $80,000 for vans, SUVs and pickup trucks; and $25,000 for used vehicles. All the vehicles in the proposed program must be registered to California residents.
The specific dollar amounts of the incentives are still to be determined.
In an email, the Air Resources Board said the agency plans to hold a workshop in the spring that will “gather stakeholder input” and that more details “will be finalized in the coming months.”
Legislators in Sacramento have to approve Newsom’s proposal for it to take effect, but Democrats hold a supermajority in the Statehouse.
The California Legislature is constitutionally required to pass a budget bill by June 15 each year, although trailer bills don’t have to be passed by that date.
The potential return of a California-based rebate program for zero-emission vehicles comes in the aftermath of the elimination of federal tax credits for EVs.
Last summer, the 940-page federal budget legislation dubbed the “One Big Beautiful Bill” was passed by Republicans on Capitol Hill and signed into law by President Donald Trump. Its provisions included tossing out tax credits of up to $7,500 on the purchase or lease of a new EV and $4,000 for a used one, effective Sept. 30, 2025.
“The Trump administration’s reckless retreat has created unprecedented uncertainty for automakers and families alike,” Newsom’s senior climate adviser Sarah Swig, said in a statement Monday. “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.”
A representative for California car dealers said he liked the details released Monday, including the proposed dollar-to-dollar match between the state and carmakers.
“Any additional encouragement, financial or otherwise, for consumers to purchase these vehicles is a really good thing,” said Brian Maas, president of the California New Car Dealers Association. “
But at the same time, Maas wondered how long the funding earmarked for the program would last.
“The challenge, I think, by having (the incentive program) so broadly based is the $200 million probably isn’t going to go very far if you include all new and used EVs,” Maas said. “We’re selling several hundred thousand EVs a year (in California) … But that’ll be part of the debate in the Legislature and as part of the budget process.”
While attending the World Economic Forum in Davos, Switzerland last month, Newsom said, “While Washington now cedes the global clean vehicle market to China, California is ensuring American workers and manufacturers can compete and win in the industries that will define this century.”
Newsom’s second and final term as governor concludes at the end of this year, and there’s widespread speculation that he will run for president in 2028.
California Senate Minority Leader Brian Jones, R-Santee, said, “Newsom is scrambling to force Californians into electric vehicles ahead of his presidential run,” and derided resurrecting the rebates.
“Now he wants to spend $200 million more in the middle of a $35 billion budget crisis created by overspending on blue sky delusions just like this,” Jones said in an email.
A recent report from the Legislative Analyst’s Office predicts lawmakers in Sacramento face a budget shortfall of almost $18 billion in 2026-27 and estimates structural deficits may grow to about $35 billion in the following fiscal year.
The Environmental Defense Fund praised bringing back the incentives.
“This can-do proposal will make clean cars more affordable, saving families money, cutting harmful pollution, spurring innovation, and supporting the global competitiveness of our auto industry,” said Peter Zalzal, the group’s vice president of clean air strategies.
California used to have a rebate program that operated for more than a decade. Called the Clean Vehicle Rebate Project, it offered thousands of dollars to buyers of EVs, plug-in hybrids and hydrogen fuel-cell vehicles. But the program was discontinued in late 2023
The rebates ended in late 2023 because of a lack of funding due to a combination of surging EV adoption rates and a drop in gas tax revenue that threatened state road repair funds.
California has more zero-emission vehicles on the road than any other state. Cumulative sales in the Golden State have surpassed 2.55 million and have grown 300% since the end of 2019.
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