SACRAMENTO, Calif., July 14, 2026 — California is launching a new electric vehicle rebate program that will provide up to $3,500 for first-time buyers of new EVs. Governor Gavin Newsom signed legislation on July 13 creating the state rebate initiative, which is expected to begin later this summer. The $270 million program will be funded through the state budget and contributions from participating automakers. The rebates will be available to eligible California residents who purchase qualifying electric vehicles.

The program comes after the federal government ended major EV tax incentives, including the $7,500 credit for new electric vehicles and the $4,000 credit for used EVs. The removal of those incentives has affected consumer demand as buyers face higher upfront costs. California’s new rebate program is designed to provide financial assistance to consumers while encouraging automakers to participate in efforts to increase EV ownership across the state.

State Incentives Cover New and Used Electric Vehicles

The new rebate structure provides a $3,500 incentive for first-time buyers of new electric vehicles priced up to $50,000 based on the manufacturer’s suggested retail price. The program also includes a separate $1,750 rebate for used electric vehicles that cost up to $25,000. By covering both new and used vehicles, California intends to make electric vehicles more accessible to a wider group of consumers.

The California Air Resources Board will oversee the program, but has not yet announced the automakers participating in the initiative. Officials expect to release information about participating companies next month. California’s previous EV rebate program ended in 2023 after spending $1.49 billion over a decade to help fund 586,000 electric vehicle purchases. The new program marks another state effort to encourage EV adoption among residents.

EV Market Faces New Challenges After Federal Incentive Changes

The new California rebate program follows major changes in federal EV policy. President Donald Trump signed legislation last year that removed federal tax credits for electric vehicle buyers. The decision eliminated the $7,500 incentive for new EV purchases and the $4,000 credit for used electric vehicles, reducing financial assistance that had helped many consumers purchase battery-powered cars.

Electric vehicle sales in the United States have slowed compared with previous expectations. The International Energy Agency reported that EVs represented 7.8% of vehicle sales in the U.S. last year, compared with 8.1% in 2024. Globally, EV adoption has grown faster, with one out of every four new cars purchased worldwide in 2025 being an electric vehicle. U.S. EV sales increased in the second quarter compared with the previous three months, partly due to higher gasoline prices, but sales remain below levels recorded in earlier years.

California Maintains Focus on Electric Transportation Growth

California continues to be one of the largest electric vehicle markets in the country. EVs accounted for about 20% of new car sales in the state last year, with Tesla representing almost half of total EV purchases. State officials have continued to promote electric transportation policies as part of efforts to reduce vehicle emissions and encourage consumers to move away from gasoline-powered cars.

Governor Newsom has criticized federal actions targeting EV policies, saying they could weaken clean vehicle manufacturing in the United States and create advantages for competitors such as China. The White House did not immediately respond to comments regarding the new California rebate program. The disagreement between California and the federal government also involves vehicle emissions rules, with the Trump administration moving against California regulations adopted by nearly a dozen other states that would phase out new gasoline-powered vehicle sales by 2035. California has filed a legal challenge against the federal action.

Automakers Adjust Plans as EV Industry Changes

Automakers are adjusting their strategies as consumer demand, government incentives, and regulatory policies influence the electric vehicle sector. California’s rebate program provides another incentive structure for companies selling EVs in the state. Manufacturers are also reviewing production plans, vehicle pricing, and product offerings as they respond to changing consumer preferences.

The Trump administration is making additional regulatory changes that could reduce costs for automakers related to purchasing credits from Tesla and other companies to meet previous emissions requirements. The electric vehicle sector is going through a period of change as manufacturers balance investments in EV technology with consumer concerns about vehicle prices, charging availability, and selection. California’s rebate initiative is designed to encourage more residents to consider electric vehicles as the state continues its efforts to increase EV adoption. The program’s results will depend on consumer participation, automaker involvement, and the availability of eligible vehicles when rebates become available later this summer.