California’s plan to backfill federal tax incentives for EV purchases has stalled, and Governor Gavin Newsom says General Motors is partly to blame.
The details: Facing a budget deficit, Newsom announced that his proposal to replace the soon-to-expire $7,500 federal EV tax credit with state subsidies is no longer feasible.
California residents (the largest EV market in the U.S.) will now have to absorb the $7,500 cost difference themselves once the credit ends Sept. 30.
In Q1 2025, zero-emission vehicles (ZEVs) made up 23% of new vehicle sales in the state, with total ZEV sales nearing 2.5 million since 2010.
What they’re saying: “We can’t make up for federal vandalism of those tax credits,” Newsom said during a September 19 press conference in San Francisco, reports Inside EVs. “The state will support expanding EV infrastructure, but not the direct subsidies that we cannot make up for.”
Why it matters: California’s inability to replace the $7,500 credit could sharply curb EV sales in the state, undermining adoption in a market that has been central to the country’s electrification push.
OUTSMART THE CAR MARKET IN 5 MINUTES A WEEK
No-BS insights, built for car dealers. Free, fast, and trusted by 55,000+ car dealers.
Between the lines: Newsom also blasted U.S. automakers that backed efforts to roll back California’s EV mandates, including the state’s plan to ban new gas-powered cars.
The Detroit Three have criticized California’s ZEV goals as unrealistic, arguing the mandates would impose steep costs and strain production.
GM even urged employees to lobby state leaders against California’s ZEV initiatives, citing slowing EV demand and higher production costs.
“Mary Barra sold us out, eliminating Ronald Reagan's work, eliminating the progress we made under the California Air Resources Board in 1967, where we began the process of regulating tailpipe emissions. The Republicans rolled that back this year [under] Donald Trump's leadership, but the American automobile manufacturers allowed that to happen,” Newsom continued. “GM led that effort.”
Bottom line: Without California stepping in to replace the federal incentive, EV adoption in the nation’s largest market could slow—putting pressure on automakers to cut costs, improve affordability, and accelerate infrastructure partnerships.
A quick word from our partner
Winning in today’s market means more than just adjusting prices or boosting ad spend.
It’s about seeing what’s holding each vehicle back - and taking smarter action from day one.
Long before AI became a buzzword, Lotlinx built the industry's first VIN performance platform — powered by AI and the most robust dataset of VIN and shopper behavior — to help dealers optimize every vehicle and maximize profit.
With Lotlinx, dealers can:
Spot inventory risk before it hits
Move cars with precision
Turn each VIN Into a star
Visit lotlinx.com to discover how to win with every VIN and maximize profit - one VIN at a time.
