California’s New EV Incentive Is Coming, Benefitting Rivian And Lucid

With the federal EV tax credit of up to $7,500 no longer available, California is moving to introduce its own incentive program to encourage electric vehicle adoption. State lawmakers and Governor Gavin Newsom have approved a budget that sets aside $135 million for a new EV rebate program, while legislation establishing the details continues to advance through the state legislature.

The California incentive will be offered as an instant discount at the dealership, allowing buyers and lessees to receive the savings immediately instead of claiming a credit later. The program will be limited to first-time EV buyers, who must certify that they have not previously owned or leased an electric vehicle.

The legislation also establishes vehicle price limits. New EVs must have a manufacturer’s suggested retail price of $50,000 or less, while used EVs must have a sale price of no more than $25,000 to qualify. However, the bill includes a significant exception for California-based automakers.

The legislation states that incentives will still be available for vehicles produced by zero-emission vehicle companies headquartered in California, regardless of the vehicle’s MSRP or sale price. This exemption allows vehicles from Rivian and Lucid to qualify even if they exceed the standard price caps.

Rivian, headquartered in Irvine, currently does not sell a new vehicle below $50,000. Its recently introduced 2027 R2 Performance with the Launch Package starts at $57,990, although a lower-priced version is expected to arrive with a starting price of about $45,000. Lucid, based in the San Francisco Bay Area, also benefits from the exemption. Its Air sedan starts at $70,900, while the Gravity SUV begins at $79,900. Lucid is also preparing to launch a smaller crossover called the Cosmos, which is expected to reach the U.S. market next year.

Tesla presents a different situation. Although the company was founded in Silicon Valley and continues to manufacture vehicles at its Fremont, California, factory, it relocated its corporate headquarters from Palo Alto to Austin, Texas, in 2021. Because of that move, Tesla would not qualify for the California-headquartered exemption. Many Tesla models, however, already fall below the program’s $50,000 price cap.

Lawmakers appear to recognize that the preferential treatment for California-based automakers could face legal challenges. The bill includes language stating that if a court rules the exemption invalid, the remainder of the incentive program will remain in effect.

The proposal comes as California responds to significant changes in federal transportation and environmental policy. Since the current administration took office, the federal government has rolled back several clean vehicle initiatives. Congress eliminated penalties tied to federal fuel economy standards, while the Environmental Protection Agency ended greenhouse gas emissions regulations for vehicle tailpipes. California also lost its authority to enforce vehicle emissions standards that are stricter than federal rules, effectively suspending its requirement that automakers gradually increase sales of zero-emission vehicles.

Governor Newsom previously pledged that California would develop its own EV incentive if the federal tax credit disappeared. The former program provided up to $7,500 for qualifying new EV purchases and up to $4,000 for eligible used EVs and was originally expected to remain in place through 2032.

The California Air Resources Board will finalize rebate amounts, with earlier discussions pointing to incentives of about $3,500 for new EVs and roughly half that for used models. Automakers would fund half of each rebate.

In addition to the consumer EV incentives, California’s new budget allocates another $135 million to encourage the adoption of heavy-duty electric trucks and buses.

Electric vehicle advocates and environmental organizations welcomed the proposal.

EVinfo.net’s Take: Smart Move by California, Saving America From Federal Mistakes

Nearly every federal policy from the current administration regarding transportation, climate, renewable energy, and electric vehicles has been a huge mistake. Very, very, very DUMB.

Over the past year, the United States has taken several steps away from policies that support cleaner transportation. Instead of encouraging electric vehicle adoption and reducing harmful emissions, recent federal actions have weakened incentives and proposed rolling back environmental protections that have helped improve air quality for decades. These changes threaten public health, slow climate progress, and will ultimately cost American drivers more.

The elimination of the federal EV tax credit removed one of the nation’s most effective tools for making electric vehicles more affordable. The incentive helped narrow the upfront price difference between EVs and gasoline-powered vehicles, allowing more middle-income families to make the switch. Without it, many buyers will delay purchasing an EV, slowing market growth just as manufacturing scale and competition are driving prices lower. Slower adoption also reduces pressure on automakers to expand production and invest in new battery technologies, delaying future cost reductions for consumers.

At the same time, the administration has proposed relaxing federal vehicle emissions standards. Decades of scientific research have shown that pollution from vehicle tailpipes contributes to ground-level ozone, fine particulate matter, and other pollutants linked to asthma, heart disease, lung disease, and premature death. Weakening these standards allows higher emissions of nitrogen oxides and particulate matter, increasing smog and worsening air quality. Communities already experiencing the highest levels of pollution are likely to suffer the greatest health impacts.

A new study from the International Council on Clean Transportation (ICCT), the organization known for exposing Volkswagen’s Dieselgate emissions scandal, concludes that a faster global transition to electric vehicles could prevent 8.8 million premature deaths by 2050.

Equally concerning is the proposal to weaken or eliminate the Environmental Protection Agency’s 2009 endangerment finding. That landmark determination concluded that greenhouse gases threaten public health and welfare under the Clean Air Act. It serves as the legal foundation for regulating carbon dioxide and other climate pollutants from vehicles, power plants, and industrial facilities. Removing it would significantly limit the federal government’s authority to reduce emissions and make future climate regulations far more difficult to implement and defend in court.

Transportation remains one of the largest sources of greenhouse gas emissions in the United States. Policies that discourage EV adoption while allowing more pollution move the country further away from its climate goals. The consequences extend well beyond environmental concerns. According to the American Lung Association, increased tailpipe pollution contributes to more respiratory illness, cardiovascular disease, and higher healthcare costs.

Drivers also become more vulnerable to fluctuating gasoline prices and spend more on fuel and routine vehicle maintenance. Electric vehicles typically have lower operating and maintenance costs over their lifetime, making them a smart financial choice for many households.

These foolish actions also reduced America’s national security. The Iran war highlighted how exposed the U.S. is to oil-related price shocks.

The horrible federal mistakes also dragged down America’s economy. Every time a driver charges an EV instead of filling a tank with imported fuel, energy spending stays within the local economy. That money supports domestic energy production, local jobs, grid improvements, and renewable energy development.

Every consumer has a voice. Supporting electric vehicles, renewable energy, and leaders who prioritize clean transportation helps shape the future of America’s economy, environment, and public health.

Luckily, America has smart state leaders like California’s to make up for federal mistakes. EVinfo.net has never been more proud of our beautiful home state of California, and we hope other states follow in these footsteps, bringing cleaner air and lower costs through more EV adoption. I’m especially glad that the new law benefits Lucid and Rivian, two of America’s most important companies.