Governor Gavin Newsom previously said California would restart its Zero-Emission Vehicle (ZEV) rebate program once the federal EV tax credit expired.
However, as the anticipated deadline of September 30 approaches and given California’s budget deficit, Newson announced that the state will not revive the program.
According to the politician, California “can’t make up for federal vandalism of those tax credits,” and won’t be able to support direct subsidies, while remaining committed to support expanding EV infrastructure in the state.
After Donald Trump’s election late last year, Newsom had promised that California would step in if Trump followed through on his threat to end the $7,500 federal credit.
Automakers, including Tesla, Rivian, Hyundai, and Volkswagen, have since urged Governor Newsom to create a $5,000 state incentive to offset the loss of the federal EV tax credit in California, the nation’s largest auto market.
Despite the Government’s efforts, California will not be able to revive the EV credit yet, but the Governor’s office said that it is possible that it can come back “next year.”
The office cited hundreds of millions of dollars from a carbon-trading program that supports environmental initiatives, which the states will soon have to allocate.
California’s previous EV rebate program ended in 2023, after President Joe Biden approved the federal tax credit as part of the Inflation Reduction Act (IRA), signed into law in August 2022.
Under the IRA, buyers of eligible electric vehicles starting in 2023 could receive up to $7,500, provided the vehicle met requirements for battery sourcing and final assembly.
The law originally set the credit to expire on December 31, 2025, unless new legislation extended or replaced it.
Earlier this year, Congress moved the expiration date up to September 30, following a proposal by Senate Republicans and reflecting the Trump Administration’s push to end clean energy and EV tax incentives.
Congress also voted to block California’s ban on selling gasoline-powered vehicles from 2035.
Detroit automaker General Motors, which is reshifting its focus towards internal combustion engine (ICE) vehicles, told employees that it was opposing the EV mandate.
According to an email, “emissions standards that are not aligned with market realities pose a serious threat to our business by undermining consumer choice and vehicle affordability.”
GM reportedly wanted a national emissions policy instead of separate rules for each state.
The company also pointed out that demand for EVs is falling, even as the overall auto market grows, and that EV manufacturing costs are rising to record levels.
In July, GM halted its plans to produce EVs in Orion, telling its employees it will produce internal combustion engine (ICE) vehicles in the site instead.
According to a recent Reuters report, General Motors will halt production of two electric Cadillac SUVs in Spring Hill, Tennessee, in December.
In last week’s press conference, Newsom criticized the Detroit automaker’s position, saying that General Motors and CEO Mary Barra “sold us out.”
