Newsom seeks $200M to replace EV tax credits cut by Trump

California Governor Gavin Newsom is asking for $200 million to restart offering tax rebates for electric vehicles that are purchased in the state, making up for a similar federal program that President Donald Trump ended last year.

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The proposal would require approval from state lawmakers, who are set to negotiate the broader California budget ahead of a July deadline. Details on the new program, including the amount of individual rebates and which cars would be eligible, are still being discussed, said Lindsay Buckley, spokesperson for the California Air Resources Board.

“Despite federal interference, the governor maintains his commitment to protecting public health and achieving California’s world leading climate agenda,” Buckley said in an email.

Newsom has gone back-and-forth on using California resources to backfill the federal EV tax credits Trump cut. An initial 2024 proposal had market-share caps that would have excluded Tesla Inc.’s best-selling models, drawing the ire of Elon Musk who called the plan “insane.” The proposal was later dropped as California’s budget gap widened, with Newsom then saying that the state “wouldn’t make up for federal vandalism of those tax credits.”

California is the biggest EV market in the country and Newsom’s proposal could be a boon for struggling manufacturers.

Tesla and other automakers reported slowdowns and declines in electric vehicle sales in the fourth quarter after the loss of federal incentives, following a rush from EV buyers taking advantage of an expired $7,500 federal credit. 

The Natural Resources Defense Council, an environmental advocacy group, applauded Newsom’s proposal saying he “made clear that California will move forward forcefully with our clean energy and climate progress.”