California Won’t Replace Federal EV Tax Break, Newsom Says

The state will instead focus on investing in infrastructure, the governor said.

A Volkswagen ID.4 electric vehicle charges at a shopping mall parking lot in Torrance, Calif. Patrick T. Fallon / AFP via Getty Images

California Gov. Gavin Newsom said the state will not be stepping in to cover a federal tax credit for electric vehicle (EV) purchases that is set to expire at the end of September, saying it is unaffordable.

During a press conference on Sept. 19, Newsom told reporters that the state simply lacks resources to bridge the gap left by the Biden-era subsidy.

“We can’t make up for the federal vandalism of those tax credits [by the Trump administration],” he said. “But we can continue to make the unprecedented investments in infrastructure.”

Newsom said the state has 48 percent more public EV chargers than traditional gas nozzles.

His stance is a reversal of his previous commitment to replace the rebates if Washington withdrew funding, a shift attributed to California’s budget constraints.

Newsom reserved sharp criticism for General Motors (GM) and its CEO, Mary Barra, alleging that the company spearheaded opposition to California’s push for stricter pollution rules and a 2035 prohibition on new gasoline vehicle sales.

“GM sold us out,“ he said, linking GM’s actions to broader rollbacks of environmental policies under the Trump administration. ”Mary Barra sold us out, eliminating [former California Gov.] Ronald Reagan’s work, eliminating the progress we made under the California Resources Board in 1967, where we began the process of regulating tailpipe emissions.”

GM has slowed production of EVs amid the changes, but Barra said the company will not drastically lower EV prices to offset the loss of the $7,500 tax credit, saying she believes that the market will adjust.

The federal incentive has fueled EV adoption nationwide, with California making up 25 percent of new-car sales in 2024, although they are driven partly by regulations requiring automakers to meet EV sales targets in order to sell gasoline-powered vehicles.

California’s EV drivers will also lose their ability to use carpool lanes solo, as a federal program granting the privilege also expires on Sept. 30.

On Jan. 20, his first day in office, President Donald Trump signed the “Unleashing American Energy” executive order, which canceled the state’s EV mandate and eliminated federal incentives for EVs, including the $7,500 tax credit.

The order further directed the Environmental Protection Agency to revoke waivers granted to California and other states that restricted sales of gas-powered cars.

Since then, Trump has approved three Congressional Review Act resolutions to halt several of California’s emissions regulations that relied on those Environmental Protection Agency waivers. One of these resolutions overturned the state’s prohibition on new gas-powered vehicle sales after 2035.

California’s earlier rebate program ended in 2023, after funds dried up. The program had distributed $1.49 billion in rebates for more than 594,000 vehicles since its launch in 2010.