California Governor Gavin Newsom announced Thursday that 13 automakers will partner with the state to offer rebates of $3,500 off new vehicles or $1,750 off used models for customers leasing or buying their first zero-emission vehicle.
This program stems from a bill Newsom signed earlier in the week, which provides $135 million in incentives.
Let’s start here, though: The One Big Beautiful Bill ended the Clean Vehicle credits of up to $7,500 for the purchase of new EVs and up to $4,000 for used EVs in September 2025.
When the program ended, EV sales fell 46% in 4Q of 2025 from the previous quarter.
And even with higher gas prices due to the conflict in the Middle East, new EV sales remained down through the first half of 2026.
Used EV sales, on the other hand, were up 20% year-over-year as more off-lease models hit the market.
Golden State efforts: Now, with the federal rebate gone, California lawmakers in the state's 2026-27 budget allocated $135.5 million for a first-time EV buyer incentive.
With this, the $3,500 off EVs with an MSRP of up to $50,000 will be available at the point of sale.
For used EVs, $1,750 will be available for units $25,000 or less.
The California Air Resources Board (CARB) is overseeing the program and is expected to release details on how the funds will be accessible within the next month.
OEMs provide matching funds: The big new development is that 13 OEMs have signed on to the program to provide matching funds to the pile, pushing the total amount for incentives to $270 million.
The participating automakers, according to Newsom, include Ford, General Motors, Honda, Hyundai, Kia, Lucid, Mitsubishi, Nissan, Rivian, Subaru, Tesla, Toyota and Volvo.
The law includes a provision that there is no price cap for California-headquartered zero-emission vehicle companies, which includes Rivian and Lucid.
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What they’re saying: California New Car Dealers Association Chairman Jessie Dosanjh of Stevens Creek Chevrolet told CDG News he’s encouraged by the legislation, and that CARB has worked with dealers to get their input.
“That incentive will hopefully help move some EVs, and hopefully as many OEMs participate as possible,” Dosanjh said. “It’s not a permanent solution, but it will definitely be some welcome short-term or medium-term assistance for buyers.”
Bottom line: Once funds are released, Dosanjh expects the incentives to be exhausted within a few months. He said dialogue with the state will continue on programs to help the industry.
“The insight we provide as industry experts on the ground with respect to policies surrounding emission standards, as well as the implementation and suggestions on how to implement programs like this rebate, is very welcome,” Dosanjh said.
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