Several months ago, the $7,500 federal tax credit came to an end, which caused an EV sales rush in Q3 and a significant dip in Q4 2025. Some states still have their own EV incentives, while California is working on developing a new program.
State Of Charge‘s Tom Moloughney recently had an opportunity to chat with Mike Murphy of EVPoliticsUSA (@EVPoliticsUSA / X) about the upcoming new EV incentive program in California, which might offset part of the $7,500 federal tax credit.
The idea is to boost EV sales and potentially make a new template for a few other states, which would introduce similar incentive programs.
$200 Million for EV Incentive Program
According to the proposed budget for 2026-2027, California plans “$200 million one-time special funds and statutory language to establish a new light-duty ZEV incentive program.”
Details about the EV incentive program are still under discussion. Mike Murphy, who is engaged in the debate, says that the California state rebate might be $2,000-$4,000 per car, which could potentially support 50,000-100,000 EV sales.
For reference, California reports nearly 400,000 new electric car sales annually, making it the largest EV market in the US (about a third of total EV sales). It’s worth noting that the top 15 states account for roughly 80% of all EV sales.
There may be no price or income caps in the new program, although there is one primary keynote: conquest sales. The idea is to offer the new credit only to first-time buyers (for whom it will be their first EV), because EV drivers who switch to electric typically stick with it. Thus, the limited number of incentives would have a more meaningful impact on the transition from internal-combustion engine cars to all-electric cars.
A separate discussion is how to incentivize EV sales for dealers or even salespeople.
Once the details are finalized and the program is approved, the new EV incentives may be available within a year (as early as late 2026).
Check more about the topic on EVs for All America and American EV Jobs Alliance.