California introduces a new EV $3,500 incentive to replace the discontinued federal tax credit

Back in September 2025, the federal EV tax credit in the US expired, and the Trump Administration refused to renew it. It was part of the Inflation Reduction Act introduced by the Biden Administration and shaved off $7,500 from some EVs, helping first-time EV owners get their vehicles at a significantly lower price.

Since then, California vowed to introduce an EV incentive of its own in order to boost EV sales, and today, Governor Gavin Newsom signed the bill.

First-time EV buyers can get a $3,500 price reduction on vehicles with an MSRP lower than $50,000. Used EVs that cost less than $25,000 are also included in the program, which are eligible for a $1,750 discount.

While this isn't as much as the federal tax credit, it can still make an impact given that many new models from Toyota, Tesla, Ford and Subaru will drop below the $30,000 mark. Additionally, locally produced vehicles are exempt from the $50,000 cap, like Lucid and Rivian vehicles.

The California state budget funds the program and will cost the state $135.5 million. Participating automakers will also chip in, growing the pool to $270 million.

The participating automakers are the catch here because we are still waiting for the full list of manufacturers.

The bill states that the discount will be applied at the time of purchase, so you don't have to go through unnecessary paperwork or follow any rebate instructions. The program will kick off by the end of this summer, if everything goes as planned, according to the governor.

Via