California Gov. Gavin Newsom\u2019s $200 million plan to revive the state\u2019s stalling electric-car market faces several fundamental problems: It isn\u2019t enough money, it may not reach consumers quickly enough and the state hasn\u2019t decided whether to subsidize \u2013 or exclude \u2013 wealthier buyers.<\/p>\n
The Newsom administration\u2019s budget proposal \u2014 rolled out after President Donald Trump dismantled federal electric vehicle incentives<\/a> and blocked<\/a> California\u2019s clean-vehicle mandate \u2014 would cover rebates for only about 20% of last year\u2019s EV sales. That CalMatters estimate assumes the state follows the model of the Clean Vehicle Rebate Program, which offered rebates of up to $7,500 toward some electric and hybrid cars before the California Air Resources Board ended it in 2023.<\/p>\n So far the administration has released few details about the proposal, leaving experts and lawmakers circling a basic question: Who should get the money?<\/p>\n \u201cIt is better than nothing, which is what a lot of things are getting right now,\u201d said Mars Wu, a senior program manager with the Greenlining Institute, which advocates for investments in communities of color. \u201cHow far that $200 million goes really depends on how the program is going to be structured.\u201d<\/p>\n A small incentive in a huge market<\/p>\n California\u2019s electric car market is one the governor celebrates on the world stage. While at the World Economic Forum in Davos, Switzerland earlier this week, Newsom highlighted that California has surpassed 2.5 million clean car sales, saying the achievement came after the state \u201cinvested in this future when others said it was impossible.\u201d He framed the number against a modest goal<\/a> to get 1.5 million clean cars on the road, set more than a decade ago.<\/p>\n California officials remain confident the state\u2019s policies will succeed in pushing the transition to electric cars. Even as sales have slipped, EVs will drive future electricity demand, according to a long-term forecast<\/a> approved Wednesday by the California Energy Commission.<\/p>\n But the limits of the governor\u2019s $200 million EV proposal become clear in the numbers. A CalMatters analysis found the incentive would cover only one out of every five EV sales, assuming similar sales to last year, and the same average rebate level as the state\u2019s last mass-market rebate program.<\/p>\n Advocates are also raising concerns about how quickly the money can get to consumers. Christopher Chavez, deputy policy director at the Coalition for Clean Air, a California-focused advocacy group, warned that the proposed rebates may not reach consumers until 2027, given how long it takes to approve the budget and to set up a new program. If the funding only lasts a year, the program would leave out buyers who need time to plan or save, he added.<\/p>\n Just the right amount of news<\/p>\n Just the right amount of news<\/p>\n Get California\u2019s most essential headlines without feeling overwhelmed.<\/p>\n Get California\u2019s most essential headlines without feeling overwhelmed.<\/p>\n \u201cIt\u2019s not going to be enough \u2014 just to be blunt about it,\u201d Chavez said. \u201cTwo-hundred million for a mass-market program will go very quickly.\u201d<\/p>\n The proposal comes as the latest sales numbers show an electric car market slump. Nationally, the loss of the uncapped, popular federal tax credit has accelerated manufacturer write-downs<\/a> and sales declines<\/a> as automakers adjusted to a tougher EV market.<\/p>\n In California, the slowdown has pushed the state further off course from its climate goals: even before Congress and President Trump blocked its vehicle mandate last year<\/a>, California was struggling to hit a requirement that 35% of new cars sold in 2026 be zero-emission. Last year electric and other zero emission cars made up about 23% of new car sales in 2025, down from roughly 25% the year prior, California Energy Commission data shows<\/a>.\u00a0<\/p>\n Sales slowed down dramatically at the end of the year, when EVs and other clean cars accounted for just under 19% of new car sales in the fourth quarter of 2025 \u2014 the lowest quarterly share since mid-2022.\u00a0\u00a0\u00a0<\/p>\n The Newsom administration will likely lay out the details of its proposal in a draft bill tied to the state budget<\/a>. The Clean Vehicle Rebate Program would be \u201cthe foundation we\u2019d be building from,\u201d wrote Lindsey Buckley, an air board spokesperson, in an email, adding that the goal would be to deploy the $200 million \u201cas soon as possible to support the market.\u201d<\/p>\n Buckley said it is \u201cspeculative\u201d\u00a0 to predict the impact of a new EV incentive or how quickly the money would reach consumers.<\/p>\n With limited funding, advocates say the question of who qualifies for the rebates becomes critical.<\/p>\n \u201cWhat we really don\u2019t want to see is that money going towards higher-income folks for whom it would just be kind of like a bonus coupon,\u201d said Wu, of the Greenlining Institute.<\/p>\n Fast or targeted: lawmakers face a choice<\/p>\n How the Newsom administration and lawmakers design the state\u2019s next EV incentive will determine how quickly the air board can deliver rebates \u2014 and whether the program avoids recreating past inequities<\/a>. California ended its last, broad EV rebate program in 2023 over concerns it benefited higher-income buyers. Targeting lower-income drivers delivers the greatest benefits because they tend to drive the most, and switching to EVs saves them money on fuel and maintenance, said Ethan Elkind, a climate law expert at UC Berkeley.<\/p>\n But income-based \u201cmeans testing\u201d can slow programs down, requiring income verification and layers of bureaucracy that eat up funding and discourage participation.\u00a0<\/p>\n That\u2019s a critique of one California program aimed at low-income buyers, Clean Cars 4 All, which offers grants to help drivers trade in older, more polluting vehicles for cleaner alternatives. As the state moved from budget surplus to deficit, the Newsom administration and lawmakers never adequately funded it, advocates say.<\/p>\n Lawmakers provided no new funding<\/a> in the 2024\u201325 budget year, and in the current budget cycle, the state provided only about $45 million through a combination of funds and one-time budget actions, according to the Legislative Analyst\u2019s Office<\/a>. That falls well short of a sustained, long-term commitment, said Chavez, of the Coalition for Clean Air.<\/p>\n \u201cIt\u2019s become \u2014\u00a0especially as the budget has become more difficult \u2014 more of a secondary priority, which is unfortunate,\u201d he said.<\/p>\n Competing ideas, no clear consensus<\/p>\n California\u2019s EV problem has no shortage of potential solutions \u2014 only disagreement over which one to choose.<\/p>\n Some policy analysts argue the state should focus on first-time adoption. A recent brief<\/a> from Atlas Public Policy found that incentives are most cost-effective when they bring a household\u2019s first electric vehicle into the garage \u2014 because once a family owns one EV, it is far more likely to buy another.<\/p>\n Elkind, of UC Berkeley, said a simpler approach \u2014 a point-of-sale rebate tied to lower-priced vehicles \u2014 would be easier for the air board to administer while avoiding subsidies for high-income buyers.<\/p>\n \u201cIf it\u2019s just tied to the price of the vehicle, that\u2019s pretty straightforward,\u201d Elkind said.<\/p>\n Some lawmakers told CalMatters the air board should tightly target the rebates to communities most affected by pollution and transportation costs. State Senator Ben Allen<\/a>, a Democrat from El Segundo, said incentives should focus on communities that suffer the most from air pollution, \u201cso as to increase the bang for air quality buck.\u201d\u00a0<\/p>\n![\"\"](\"https:\/\/www.newsbeep.com\/us-ca\/wp-content\/uploads\/2026\/01\/1769176148_582_Asset-4.png\")
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An environmental activist places signage calling for increased electric vehicle use outside the California Environmental Protection Agency building in Sacramento on June 9, 2022. Environmental activists urged the California Air Resources Board to push for a transition toward 100% electric vehicle consumer use. Photo by Rahul Lal, CalMatters<\/p>\n
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