California proposes $200m EV tax rebates amid industry shake-up

California EV tax rebates could revive slumping sales

California Governor Gavin Newsom on Friday proposed $200 million in new state electric-vehicle (EV) tax rebates, aiming to counter falling EV sales after the federal government ended its $7,500 tax credit in 2024.

The state program follows the decade-long Clean Vehicle Rebate Program, which spent $1.49 billion to subsidise 586,000 vehicles over ten years.

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Automakers face financial fallout

The federal tax credit expiration sent EV sales tumbling in late 2024, prompting automakers to reassess investments. General Motors (GM) revealed it will take a $6 billion charge to unwind some EV commitments. Meanwhile, Stellantis NV announced it will stop selling plug-in hybrid versions of the Jeep Wrangler and Grand Cherokee in North America.

Uncertainty on individual rebates

The California Air Resources Board has not yet determined how much each vehicle will qualify for under the new program. The move seeks to fill a gap created when Congress also eliminated a $4,000 used EV tax credit and barred states from using carpool lane incentives for single-occupancy EVs.

Policy shifts impacting EV market

The federal government’s October 2025 change prohibits states from letting EVs use HOV lanes without meeting occupancy requirements, a key perk that had encouraged EV adoption in California and other states.

The Trump administration has also waived fines for automakers failing to meet fuel-efficiency rules for the 2022 model year, saving billions for companies purchasing credits from Tesla (TSLA.O) and others.