Newsom Vows to Bring Back California EV Rebates if Trump Cuts Federal Credit

Gov. Gavin Newsom announced Monday that he plans to resurrect California’s Clean Vehicle Rebate Program if President-elect Donald Trump cuts the federal tax credit for zero-emission vehicles.

Trump had promised on the campaign trail to end the credit — which the Inflation Reduction Act of 2022 expanded — and the right-wing policy agenda laid out in Project 2025 urges the next Republican administration to “end federal mandates and subsidies of electric vehicles” as part of ending “the war on fossil fuels.”

However, California is pushing to have zero-emission vehicles make up 100% of in-state sales of new vehicles by 2035 — a goal that would be complicated by the possible fight from the Trump administration and a potential state deficit of nearly $2 billion. In the third quarter of this year, 26.4% of all new cars, vans and trucks sold in the state were zero-emission vehicles.

“Consumers continue to prove the skeptics wrong — zero-emission vehicles are here to stay,” Newsom said in a statement. “We’re not turning back on a clean transportation future — we’re going to make it more affordable for people to drive vehicles that don’t pollute.”

The Alliance for Automotive Innovation — representing automakers like General Motors, Ford and Toyota — asked Trump in a letter earlier this month not to cut the federal program, under which people who buy or lease a new electric vehicle could qualify for a credit of up to $7,500, depending on household income. “This is a pro-growth recipe for American leadership and competitiveness will preserve consumer choice,” the alliance wrote.

California’s program began in 2010 and ended last year. It offered car buyers up to $7,500, funded nearly 600,000 vehicles and saved more than 456 million gallons of fuel.

Funding for the revamped state program could come from the Greenhouse Gas Reduction Fund through the state’s cap-and-trade program.

However, bringing the program back will require the Legislature’s approval. Even though Newsom has vowed to fight Trump’s climate change-denying policies, the reality is that the state will simultaneously be dealing with a budget deficit that could limit how California pushes back. Though the estimated deficit is significantly smaller than in recent years, the Legislative’s Analyst Office projects that “revenues are unlikely to grow fast enough to catch up to atypically high spending growth.”

If Newsom does bring back the state rebate program, Scott Moura, associate professor of civil and environmental engineering at UC Berkeley, hopes it will be available to people who want to lease a car.

“In the United States, more people lease cars than buy them outright,” he said. “That’s a loophole, a back door where people who don’t meet the income requirements can still gain access to an electric vehicle if they lease the vehicle.”

Moura said Newsom’s decision about electric vehicles must benefit all Californians because the rebates have “disproportionately gone to people with higher incomes.”

“If the goal is to impact societally on health and climate, we need strong policies so that the lower 50% in terms of wealth distribution can access or use emission vehicles,” Moura said.

He’s also unsure how Trump’s alliance with Elon Musk, CEO of Tesla, will fare for electric vehicle sales. Moura thinks Musk might be more “in the ear of Trump” around a national standard for autonomous vehicles.

“I’m expecting more action at the federal level to make vehicles like Waymo more common across the U.S.,” Moura said.