WASHINGTON, (Reuters) – California Governor Gavin Newsom signed legislation on Monday creating state rebates of $3,500 on new electric vehicles for first-time buyers later this summer as U.S. sales have slowed.
The $270 million rebate program for California residents is funded by the state budget and automakers. It applies to new vehicles with a suggested retail price of up to $50,000. It also includes a separate $1,750 rebate for used EVs costing up to $25,000.
PresidentDonald Trump signed legislation last year that killed the federal $7,500 EV tax credit and a $4,000 used EV credit, which has reduced U.S. sales.
The state did not immediately disclose which automakers are participating. The California Air Resources Board said it hoped to be able to disclose the participating automakers next month.
The International Energy Agency said 1 in 4 new cars purchased worldwide in 2025 was an EV, compared to 7.8% of vehicles in the U.S. last year, which was down from 8.1% in 2024. EV sales rose in the second quarter over the prior three months on higher gas prices but are still below prior years.
EVs accounted for about 20% of new car sales in California last year and Tesla was almost 50% of the total.
“Donald Trump is doing everything in his power to pollute our air and surrender the clean car industry to China on a silver platter. California is putting its foot on the accelerator,” Newsom said in a statement.
The White House did not immediately comment.
California’s previous rebate program ended in 2023 and spent $1.49 billion to subsidize 586,000 EV purchases over a decade.
Trump has taken aim at EVs on a number of fronts including signing legislation in June 2025 against California’s rules adopted by nearly a dozen other states that aim to phase out new gasoline-powered cars by 2035. California has sued to challenge the procedure used to reverse the landmark EV rules.
The administration is making other changes that will save automakers billions of dollars in purchasing credits from Tesla and others to meet prior regulatory requirements.
Reporting by David Shepardson; Editing by Mark Porter
