Gov. Gavin Newsom (D-CA) will unveil an electric vehicle incentive program next week to offset the termination of federal incentives, with calls to make EVs more affordable for a broader range of consumers.
The $200 million incentive program is part of the governor’s budget proposal and is designed to accelerate the state’s EV transition. However, some electric vehicle experts said the state’s program should be accessible to people who cannot typically afford an EV.
Loren McDonald, CEO and chief analyst at EV charging data firm Chargeonomics, told the Washington Examiner: “[I]ncentivizing people who buy used vehicles, which is typically two and a half times the number each year, people that buy used cars versus new cars, I think would be really smart because then you can really get EVs in the hands of people who normally couldn’t afford them.”
The proposal comes as the Trump administration has targeted the Biden administration’s so-called “EV mandate,” which are policies that support the electric car transition. Since taking office, President Donald Trump has rolled back emissions standards and ended incentives.
Trump’s One Big Beautiful Bill Act slashed hundreds of billions of dollars in clean energy tax credits created by the Biden administration’s Inflation Reduction Act, including the EV tax credits. The credits provided consumers with up to $7,500 for purchasing a new EV and $4,000 for a used one, as a means of encouraging consumers to buy battery-powered vehicles rather than gas-powered cars.
McDonald said California should avoid matching the $7,500 rebate for new vehicles and instead offer about $4,000 for new EVs and roughly $2,500 for used ones so that more people can benefit from the incentives.
The EV tax credits were intended to encourage consumers to purchase battery-powered vehicles. But Trump and Republicans have criticized the tax incentives as overly costly and as tilting the market in favor of EVs.
Bill Magavern, policy director at the Coalition for Clean Air, also noted that the incentives target low- and moderate-income Californians who face the highest barriers to EV ownership.
“If you just created a first-come, first-served program available to anybody buying any zero-emission vehicle, most of that would be sucked up very quickly by fairly affluent people buying fairly expensive cars,” Magavern said.
The end of the EV tax credits, along with other changes in auto policies, has led automakers to adjust their strategies. As an example, Ford previously announced it would scale back its electric car production, citing overestimated demand, regulatory changes, and high costs.
John Bozzella, president and CEO of Alliance for Automotive Innovation, said in the statement, “We need to see the details of the new program, but this is a policy that has worked in the past.
“At this stage of the transition and given current market conditions, consumer incentives can lead to more EV adoption and affordability in California — and support the automotive and battery industrial base across the country,” he said.
The alliance represents auto companies such as Ford, General Motors, Toyota, Volkswagen, Hyundai, and many more.
Lauren Sanchez, chairwoman of the California Air Resources Board, told Reuters on Thursday that the governor plans to announce the program proposal next week.
“We are accelerating all of our work on zero-emissions vehicles, and we know that we have to navigate a managed transition that protects the environment, protects communities, protects workers in collaboration with the industry,” Sanchez said.
The program can take months to finalize, as it would need to be proposed in the state legislature and approved by lawmakers.
Sanchez from CARB also told Reuters that the agency would begin meeting with auto manufacturers in Detroit this week to discuss greenhouse gas regulations for cars and trucks.
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General Motors confirmed to the Washington Examiner that CARB officials are meeting with automakers in Detroit this week.
“We have a long history of dialogue and collaboration with CARB and welcome the opportunity to host them in Detroit,” a GM spokesperson said. “California has the 4th largest economy in the world and is an important market for growth and innovation.”