First-time electric vehicle buyers in California will be able to buy electric cars at subsidized rates after Governor Gavin Newsom signed legislation offering rebates for new and used EV purchases. California’s new rebate program, worth around $270 million, will provide $3,500 in rebates for vehicles costing up to $50,000 and $1,750 for second-hand electric cars priced at up to $25,000.
Price has consistently been one of the main barriers to electric vehicle adoption, especially now that the early adopter phase has passed. With these rebates, potential first-time EV buyers in California now have a little more incentive to make the jump.
Unfortunately, the incentive program fell afoul of the current federal administration’s agenda against renewable energy and sustainable technology. Last year, President Trump signed a measure that effectively ended the existing subsidy, putting a stop to a program that helped thousands of drivers afford their EV purchases. With affordable Chinese electric cars locked out of the U.S. market via import tariffs, drivers in the U.S. now have to dig deeper into their pockets.
After the Trump administration eliminated federal subsidies for new and used EV purchases, drivers across the country were forced to pay full price for electric cars. Electric cars are, on average, around $10,000 more costly than comparable gas cars, with premium and high-performing EVs being even more expensive.
The discontinued federal incentive program provided up to $7,500 in subsidies for new electric cars and $4,000 for used EVs. Having endured from the late 2000s through several presidencies, the incentive program is estimated to have disbursed billions of dollars in subsidies and certainly played a role in boosting EV sales.
The new rebate program in California will relieve drivers of some of the financial pressure of buying an electric car, although it will be limited to first-time buyers. Drivers who aren’t first-time buyers will have to pay full price.
California currently has the largest fleet of electric vehicles in the country, with electric cars comprising 20% of its new vehicle sales in 2025. It is also home to a significant network of public EV chargers, making it one of the most convenient states in which to own an EV.
State policymakers still haven’t disclosed the carmakers involved in the rebate program, but the California Air Resources Board hopes to be in a position to reveal the participating car companies in August. California had another rebate program that subsidized 586,000 electric vehicle units and disbursed $1.49 billion over 10 years before ending in 2023.
As more companies like Ferrari N.V. (NYSE: RACE) bring more electrified models onto the global market, buyers will have a bigger pool of options to pick from and then decide what they can afford, with or without rebates or subsidies.
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