California will introduce a new $3,500 instant rebate for first-time electric vehicle buyers later this summer, moving to offset the cancellation of federal EV purchase incentives with a state-funded program.
Governor Gavin Newsom announced the incentive on Monday, July 13, after signing Senate Bill 168 into law. The legislation establishes California’s new Zero Emissions Vehicle instant rebate program and allocates $135.5 million from the 2026-2027 state budget for rebates. Participating automakers will match that amount, creating a $270 million rebate program as part of California’s broader $600 million investment in zero-emission vehicles.
The program will reduce the sticker price of new electric vehicles by $3,500 at participating dealerships, provided the vehicle has a manufacturer’s suggested retail price of up to $50,000. Used electric vehicles priced up to $25,000 will be eligible for a $1,750 rebate.
The rebate will be available to first-time ZEV buyers in California. However, some plug-in hybrid owners seeking to trade in for an electric vehicle may not qualify, as certain plug-in hybrid models are classified as zero-emission vehicles under California law.
Newsom said the program is intended to help families switch to cleaner vehicles while lowering costs.
“With our new instant rebate program for electric vehicles, we’re making it easier for families to drive clean, breathe clean, and keep more money in their pockets,” Newsom said.
California previously offered EV rebates until 2023. Over a decade, the state spent $1.49 billion to support 586,000 EV purchases. Electric vehicles accounted for 20 percent of new vehicle sales in California last year, with Tesla representing nearly half of that market, according to Reuters.
In addition to the rebate program, Senate Bill 168 includes $150 million for the Community Air Protection Program and $19.8 million for lower-income buyers through the Clean Cars 4 All program.
The $50,000 price cap is expected to make several mainstream EV models eligible, including the Chevrolet Bolt, Tesla Model 3 and Hyundai Ioniq 5. Higher-priced luxury models, such as the Porsche Taycan, are unlikely to qualify.
