Newsom announces $3,500 rebate for new EV purchasers

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(The Center Square) - California Gov. Gavin Newsom has announced that automakers are offering a $3,500 instant rebate for state residents buying or leasing their first new zero-emission electric vehicle as part of a $271 million incentive program.

Customers buying or leasing a used ZEV are eligible for a $1,750 rebate.

“California is once again leading with bold, decisive action and expanding access to the benefits of zero-emission vehicles with the launch of the MyFirstEV program,” Lauren Sanchez, chair of the California Air Resources Board, said in Gov. Newsom’s press release. “This program means more than just new technology for California families – it means cleaner air for their children, lower fuel and maintenance costs and the opportunity to be part of California’s clean air future.”

According to the California Air Resources Board, the MyFirstEV program aims to accelerate ZEV deployment, strengthen California’s ZEV market, and support U.S. auto innovation.

The state is making a $135.5 million investment in the program, which will be matched dollar-for-dollar by participating automakers, totaling a $271 million investment.

Tesla, Hyundai, and Lucid are currently offering rebates, and more automakers have planned to launch rebates in the coming months, according to the press release.

But some economists view the rebates as a redistribution of wealth with the intent of forcing an increase in the demand for electric vehicles.

“You basically have to take money from some people and give it to others in order to prop up the demand for this product that people otherwise just don't want,” Wayne Winegarden, senior fellow in business and economics at the Pacific Research Institute, told The Center Square Monday. “You're trying to buy up the demand, you're trying to force a market where people don't value these vehicles the way you want them to, and it's industrial policy at its worst."

The program has a Manufacturer’s Suggested Retail Price cap of $50,000 on new vehicles and a $25,000 sales price cap on used vehicles. Manufacturers headquartered in California are exempt from the MSRP and sales price caps if they only produce ZEVs. 

A federal subsidy worth up to $7,500 in tax credits expired in September of 2025, and electric vehicle sales have dropped since then, according to Winegarden. The decrease in demand led companies like Ford and Ram to discontinue their productions of various full-size electric truck models.

“Without the subsidy, the demand isn't there, and nor do the producers believe the demand is there,” Winegarden said. “You don't need government subsidies for products that people buy every day.”

Data from the California New Car Dealers Association shows that, in the first quarter of 2025, there were 95,520 new ZEV registrations in the state of California. In the first quarter of 2026, there were 57,111 new ZEV registrations, a 40.2% decrease from the year before.

The ZEV market share declined to 13.7% in the first quarter of 2026, before increasing to 15.9% in the second quarter.

There were 80,319 new ZEV registrations from the second quarter of 2026, which is 23,208 more than the first quarter of the year.

Newsom also announced that the state’s battery storage systems have surpassed 21,000 megawatts of solar energy, which is enough to power 15.75 million homes for 4 hours each, after the sun goes down, according to the press release.

The Center Square requested an interview with Gov. Newsom’s office, but was redirected to the California Air Resources Board. The CARB did not respond by the time of publication. The Center Square also reached out to Hyundai, who declined an interview, and Tesla, who did not respond by the time of publication.