California Governor Gavin Newsom signed legislation Monday creating a $3,500 rebate for first-time EV buyers, funded by a $270 million program split between the state budget and automakers. The rebate applies to new vehicles with a suggested retail price of up to $50,000 and includes a separate $1,750 rebate for used EVs priced up to $25,000. The program fills part of the gap left by the federal $7,500 EV tax credit, which Trump eliminated last year.
The $50,000 price cap comes with a carve-out for California-headquartered EV-only manufacturers. Tesla's NASDAQ:TSLA Model 3 and Model Y fall within the threshold, though higher variants and the Cybertruck don't. Rivian NASDAQ:RIVN, headquartered in Irvine, is exempt from the cap, with all its models qualifying. California is one of the largest EV markets in the U.S., giving the rebate real demand potential. Tesla shares are down 3.27% intraday while Rivian dropped 1.29%.