California Governor Gavin Newsom announced on 3/2 that the state intends to provide financial incentives for electric vehicle buyers, stepping in after the US federal government ended its support. This initiative comes as the Trump administration phased out a 7,500 USD federal tax credit for new electric vehicles and a 4,000 USD credit for used ones, effective from 30/9/2025. This termination led to a significant drop in electric vehicle sales in the last three months of the year.

An electric vehicle charging station in Carlsbad, California, US, 14/5/2025. *Photo: Reuters*

Newsom had previously stated in late 2024 that if federal tax credits were removed, California would establish a new policy version of its Clean Vehicle Rebate Project (CVRP). The CVRP, which ran from 2009-2023, offered rebates of up to 7,500 USD per electric vehicle, mirroring the federal program. This move reinforces California's commitment to advancing zero-emission vehicles and charging infrastructure, maintaining its role as a national leader.

Over more than a decade, the CVRP allocated 1,49 billion USD, subsidizing 586,000 vehicles and saving over 456 million gallons of fuel. The exact rebate amount per buyer for the new policy has not yet been disclosed.

Newsom, a vocal critic of President Trump and a potential Democratic presidential candidate in 2028, is pushing this state-level solution. According to Bloomberg, the rebate program will cover electric vehicles, including: passenger cars priced under 55,000 USD, small trucks, pickups, and SUVs under 80,000 USD, as well as used vehicles priced at 25,000 USD or more. These thresholds mean some of Tesla's popular models will qualify for the incentive.

California's decision comes amid broader struggles for automakers facing declining electric vehicle sales. Stellantis, the parent company of Chrysler, announced this week it will halt sales of Jeep Wrangler and Grand Cherokee plug-in hybrids in North America. General Motors (GM) also incurred a 6 billion USD loss as it scaled back some electric vehicle investments.

President Trump has consistently targeted electric vehicles, including efforts to block mandatory vehicle sales regulations in California. Last July, the federal administration also rescinded the fuel economy cap policy, exempting automakers from penalties for failing to meet fuel economy rules from 2022 onwards. These changes have saved automakers billions of USD, which they would otherwise spend buying carbon credits from Tesla to comply with electric vehicle sales mandates. Last week, GM reported that the repeal of federal emissions regulations is expected to save them up to 750 million USD.

Bao Bao (according to Reuters)