California Proposes $200M EV Subsidy to Counter Federal Policy Rollback

After the U.S. federal electric vehicle (EV) tax credit expired on September 30, 2023, California Governor Gavin Newsom proposed a $200 million state-level EV rebate program to cushion the market impact. The state’s previous Clean Vehicle Rebate Project ended in 2023 after a decade of operation, during which it allocated $1.49 billion to support 586,000 new-energy vehicles. The per-vehicle rebate amount under the new proposal has not yet been determined. The expiration of the federal subsidy has already led to a sharp decline in U.S. EV sales in the fourth quarter of 2023 and prompted automakers to adjust their strategies: Stellantis announced it would discontinue Jeep plug-in hybrid models, while General Motors recorded a $6 billion impairment charge related to its electric vehicle business. Additionally, starting in October, new federal rules prohibit EVs from using carpool lanes unless they meet minimum occupancy requirements, weakening local incentives. The Trump administration also blocked California’s attempt to implement mandatory EV quotas and relaxed penalties for failing to meet fuel efficiency standards, thereby reducing compliance costs for automakers.