“California Ready to Offer State Tax Rebates for Electric Vehicles if Federal Credit is Eliminated by Trump Administration”

California Governor Gavin Newsom has announced that the state is prepared to offer state tax rebates for electric vehicle (EV) purchases if the incoming Trump administration eliminates the federal EV tax credit. This move is aimed at doubling down on California’s commitment to clean air and green jobs.

The funding for these rebates could potentially come from the Greenhouse Gas Reduction Fund, which is financed by polluters under the state’s cap-and-trade program. This fund currently supports various programs such as clean transportation, sustainable housing, renewable energy, water recycling, and more. However, any new money designated for EV rebates would have to compete with and potentially take funds away from these existing programs, and the creation of an EV rebate program would likely require approval from the state Legislature.

While Governor Newsom’s statement did not specify the cost or details of how the rebates would work, it is known that tax credits can significantly reduce the sticker price of a new electric vehicle. The federal tax credit for EVs can be as high as $7,500 per vehicle, but there are specific requirements such as the vehicle being assembled in the U.S. with a certain percentage of battery and other parts made in countries with trade agreements with the U.S.

President Trump had previously promised to end the EV tax credits, but his stance has softened in recent months, possibly due to support from Tesla CEO Elon Musk. A recent study from UC Berkeley and Duke University estimated that removing the credits could reduce EV demand by 27%.

California previously offered rebates on electric cars until they were phased out in 2023. The amount of the rebate depended on family income and was funded by the Greenhouse Gas Reduction Fund. However, due to the volatility of revenue from the cap-and-trade program, EV buyers sometimes had to wait months to receive their rebates.

The governor’s office reported that in the third quarter of 2024, 115,897 electric cars were sold or leased in California, accounting for 26.4% of new car registrations. Governor Newsom has set a target for 35% of annual new car sales to be zero-emission by model year 2026 and 100% by 2035. While automakers are required to sell a specific percentage of electric vehicles, consumers ultimately have the power to determine whether these targets are met.

Overall, California’s potential new EV rebate program aims to promote innovation and competition in the zero-emission vehicle market while continuing to support the state’s goals for clean air and green jobs.