Dive Brief:
- California Gov. Gavin Newsom signed a bill creating California’s new zero-emissions vehicle instant rebate program that gives first-time electric vehicle buyers up to a $3,500 point-of-sale rebate at a dealership on the purchase of a qualifying new ZEV, per a July 13 press release.
- Senate Bill No. 168 allocates $135.5 million under the state’s “MyFirstEV” program that can be matched with an equal contribution from participating automakers for a total of $270 million in savings passed to consumers to boost sales of ZEVs. The rebate is open to any California resident buying their first EV and is expected to launch later this summer, per the release.
- The investment aims to address the affordability gap created after Congress repealed the federal EV tax credit in September 2025, which offered up to a $7,500 point-of-sale tax credit on the purchase of a new EV or $4,000 towards a used model.
Dive Insight:
The $3,500 rebate for first time buyers in California includes new ZEV models — fully electric, plug-in hybrid, or hydrogen fuel cell light-duty passenger vehicles — with an MSRP of up to $50,000. For used EVs priced up to $25,000, the rebate is $1,750. However, for California-based EV manufacturers, including Rivian and Lucid, there is no price cap to qualify for the rebate. It leaves out Tesla, since it relocated its corporate headquarters from Palo Alto, California to Texas in 2021.
The credit is applied directly at the dealership at the time of purchase and the program is being fully funded in the state’s 2026-2027 budget.
California has historically been a leader in EV sales in the U.S. In January, the California Energy Commission announced that the state surpassed 2.5 million cumulative ZEV sales in 2025, with cumulative new ZEV sales growing over 300% since 2019 alone.
EV sales volume in the U.S. also hit an all-time high in the third quarter of last year reaching 438,487 units sold as buyers rushed to take advantage of the expiring federal EV tax credit, according to Kelley Blue Book data. During the fourth quarter of 2025, Californians purchased 79,000 new ZEVs, accounting for 18.9% of new car sales in the state during the quarter.
Still, affordability is also a factor impacting sales of both ICE and EVs after the average vehicle transaction price topped $50,000 for the first time ever in September 2025, which coincided with the exipration of the federal EV tax credit. Combined with soaring gas prices in 2026, demand for more affordable used EVs is now on the rise, which is expected to drive up prices that the state’s ZEV incentive program may help to offset.
“With our new instant rebate program for electric vehicles, we’re making it easier for families to drive clean, breathe clean, and keep more money in their pockets,” Newsom said in a statement. “As California leads the world toward a clean future, our message is clear: no one can stop Californians from choosing vehicles that are better for their wallets and better for the air they breathe.”
To further support EV adoption in California, the state has continued to expand charging infrastructure. Gov. Newsom announced last September that the state’s public and shared EV charging ports exceeded 200,000, which is 68% more than the number of gasoline nozzles statewide, according to the California Energy Commission.
