California Governor Gavin Newsom signed legislation Monday 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 is a meaningful filter. Tesla's NASDAQ:TSLA Model 3 and Model Y fall within the threshold, though higher variants and the Cybertruck don't. Rivian's NASDAQ:RIVN base R2 Standard would also qualify, but deliveries don't begin until the first half of 2027. 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%.
The rebate won't fully replace the federal credit's scale, but for first-time buyers shopping under $50,000, it's a real incentive.