WASHINGTON, (Reuters) – California Governor Gavin Newsom is proposing $200 million in new state electric-vehicle tax rebates after Congress earlier this year ended a federal $7,500 state tax deduction on new EVs, the state said on Friday.
In late 2024, Newsom said if President Donald Trump eliminated a federal EV tax credit, he would propose creating a new version of the state’s Clean Vehicle Rebate Program that ended in 2023 and spent $1.49 billion to subsidize 586,000 vehicles over a decade. EV sales fell sharply in the final three months of 2024 after the federal tax credit expired on September 30.
The legislation ending the $7,500 new federal EV tax credit also ended a $4,000 used EV credit.
On Friday, the California Air Resources Board said it was not yet clear how much per vehicle the state may offer in tax rebates.
Automakers are grappling with the fallout of fewer EV sales.
Chrysler-parent Stellantis said on Friday it will stop selling its plug‑in hybrid electric Jeep Wrangler and Grand Cherokee in North America, while General Motors said Thursday it would take a $6 billion charge to unwind some electric-vehicle investments.
The federal government, effective October 1, barred states from allowing electric vehicles and other clean cars to use carpool lanes without meeting vehicle occupancy requirements.
California and other states had used the perk to encourage sales of EVs. Trump has taken aim at EVs on a number of fronts including signing legislation in June to bar California’s electric vehicle sales mandates. In July, the administration told automakers a new law signed by Trump will not require them to pay any fines for failures to meet fuel-efficiency rules dating back to the 2022 model year.
The administration is making other changes that will save automakers billions of dollars in purchasing credits from Tesla TSLA.O and others to meet prior regulatory requirements.
Reporting by David Shepardson in Washington; Editing by Chris Reese and David Gregorio
