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California has responded to the discontinuation of federal electric vehicle (EV) purchase incentives by launching its own state-level rebate initiative. The new program offers a $3,500 (approximately ₹2.9 lakh) rebate for first-time EV buyers and is scheduled to begin later this summer.

Governor Gavin Newsom made the announcement on Monday, July 13, following the signing of Senate Bill 168 into law. This legislation establishes California’s latest Zero Emission Vehicle (ZEV) instant rebate scheme, allocating $135.5 million from the state’s 2026–2027 budget to support rebates for first-time EV purchasers. Participating automakers will contribute an equal amount, bringing the total funding pool to $270 million. This initiative will serve as the centrepiece of California’s broader $600 million ZEV investment strategy.

Addressing the media, Governor Newsom said, “Donald Trump is doing everything possible to pollute our air and hand over the clean car industry to China. California is stepping on the accelerator. With our new instant rebate program for electric vehicles, we’re helping families drive clean, breathe clean, and save more money. As California leads the global shift toward clean energy, our message is clear: no one can stop Californians from choosing vehicles that are better for their wallets and for the air they breathe.”

Under the new program, buyers will receive a $3,500 rebate applied directly at the dealership toward new electric vehicles with a manufacturer’s suggested retail price (MSRP) of up to $50,000. Additionally, a $1,750 rebate will be available for used EVs priced at up to $25,000. The incentive is available to all first-time ZEV buyers in California. However, owners of certain plug-in hybrid electric vehicles (PHEVs) trading in for an EV may not qualify, as some PHEV models are categorised as ZEVs under California regulations.

California previously offered EV purchase rebates until 2023, spending a total of $1.49 billion over a decade to subsidise 586,000 EV purchases. According to Reuters, electric vehicles accounted for 20 percent of new vehicle sales in the state last year, with Tesla representing nearly 50 percent of that market. With the implementation of Senate Bill 168, California is committing more than $600 million to bolster clean transportation, including $150 million for the Community Air Protection Program and $19.8 million for low-income consumers through the Clean Cars 4 All initiative, alongside measures to further encourage EV adoption.

Setting the rebate limit at $50,000 for new EVs appears to be a deliberate decision by state lawmakers. Governor Newsom noted that the policy aims to make EV ownership more attainable for families seeking to transition to electric mobility. The current market offers several eligible models under this price threshold, including the Chevrolet Bolt, Tesla Model 3, and Hyundai Ioniq 5. However, luxury EV buyers eyeing high-end models such as the Porsche Taycan will not benefit from the program.