This US state could offer EV rebates if Donald Trump eliminates federal tax credit

California could offer rebates for electric vehicle purchases if the incoming Trump administration eliminates a federal tax credit for people who buy electric cars, Gov. Gavin Newsom said Monday.

Newsom, a Democrat, proposed creating a new version of the state’s Clean Vehicle Rebate Program, which was phased out in 2023 after funding 594,000 cars and saving 456 million gallons of fuel, Newsom’s office said.

“Consumers continue to prove the sceptics wrong – zero-emission vehicles are here to stay," Newsom said in a statement. "We’re not turning back on a clean transportation future — we’re going to make it more affordable for people to drive vehicles that don’t pollute."

Newsom’s proposal is part of his plan to protect California's progressive policies ahead of Republican President-elect Donald Trump's second term. He called the state Legislature to convene in a special session to help “Trump-proof" state laws by giving the attorney general’s office more funding to fight federal challenges.

However, a budget shortfall could complicate California’s resistance efforts. Early budget projections show the state could face a $2 billion deficit next year, according to a report released last week by the nonpartisan Legislative Analyst’s Office. That’s an improvement from an estimated $46.8 billion deficit the state faced last year, but the shortfall could still curtail the state’s ability to expand new programs and fight federal legal challenges. Legislative leaders in both chambers have said the state needs to stay prudent in anticipation of future budget deficits.

Karoline Leavitt, a spokeswoman for Trump's transition team, said the president-elect would deliver on his campaign promises, “including stopping attacks on gas-powered cars."

“When he takes office, President Trump will support the auto industry, allowing space for both gas-powered cars AND electric vehicles," she said in a statement.

Money for the new rebate system could come from the state's Greenhouse Gas Reduction Fund, which is funded by polluters under the state’s cap-and-trade program, the governor's office said.

Officials didn’t say how much the program would cost or how the rebates would work.

California has surpassed 2 million zero-emission vehicles sold, according to Newsom's office. The state has passed policies in recent years to transition away from fossil fuel-powered cars, trucks, trains and lawn mowers.

Trump previously vowed to end federal electric vehicle tax credits, which are worth up to $7,500 for new zero-emission vehicles. There’s also a $4,000 credit for used ones. However, Trump later softened his stance as Tesla CEO Elon Musk became a supporter and adviser.

Newsom's proposed rebates could exclude Tesla and other automakers in an effort to promote more market competition and innovation, according to the governor's office. But that is subject to negotiation with the state Legislature.

Musk called Tesla's possible exclusion “insane" in a post on X. About 42% of rebates went to people buying or leasing Tesla vehicles under the state's previous clean vehicle rebate program, according to data from the California Air Resources Board.

Trump criticized Newsom on social media after the governor called for a special session, calling out the high cost of living in California and the state’s homelessness crisis. Trump said Newsom was “stopping all of the GREAT things that can be done to ‘Make California Great Again.’"

Newsom said on his podcast earlier this month that he reached out to Trump after the election. He said at a news conference last week that he still hadn’t heard back from the president-elect.

California's defunct Clean Vehicle Rebate Program offered rebates on electric cars as high as $2,500.

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