California Gov. Gavin Newsom’s $200 million plan to revive the state’s stalling electric-car market faces several fundamental problems: It isn’t enough money, it may not reach consumers quickly enough and the state hasn’t decided whether to subsidize – or exclude – wealthier buyers.
The Newsom administration’s budget proposal — rolled out after President Donald Trump dismantled federal electric vehicle incentives and blocked California’s clean-vehicle mandate — would cover rebates for only about 20% of last year’s 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.
So far the administration has released few details about the proposal, leaving experts and lawmakers circling a basic question: Who should get the money?
“It is better than nothing, which is what a lot of things are getting right now,” said Mars Wu, a senior program manager with the Greenlining Institute, which advocates for investments in communities of color. “How far that $200 million goes really depends on how the program is going to be structured.”
A small incentive in a huge market
California’s 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 “invested in this future when others said it was impossible.” He framed the number against a modest goal to get 1.5 million clean cars on the road, set more than a decade ago.
California officials remain confident the state’s 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 approved Wednesday by the California Energy Commission.
But the limits of the governor’s $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’s last mass-market rebate program.
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.
“It's not going to be enough — just to be blunt about it,” Chavez said. “Two-hundred million for a mass-market program will go very quickly.”
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 and sales declines as automakers adjusted to a tougher EV market.
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, 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.
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 — the lowest quarterly share since mid-2022.
The Newsom administration will likely lay out the details of its proposal in a draft bill tied to the state budget. The Clean Vehicle Rebate Program would be “the foundation we’d be building from,” wrote Lindsey Buckley, an air board spokesperson, in an email, adding that the goal would be to deploy the $200 million “as soon as possible to support the market.”
Buckley said it is “speculative” to predict the impact of a new EV incentive or how quickly the money would reach consumers.
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 With limited funding, advocates say the question of who qualifies for the rebates becomes critical.
“What we really don't want to see is that money going towards higher-income folks for whom it would just be kind of like a bonus coupon,” said Wu, of the Greenlining Institute.
Fast or targeted: lawmakers face a choice
How the Newsom administration and lawmakers design the state’s next EV incentive will determine how quickly the air board can deliver rebates — and whether the program avoids recreating past inequities. 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.
But income-based “means testing” can slow programs down, requiring income verification and layers of bureaucracy that eat up funding and discourage participation.
That’s 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.
Lawmakers provided no new funding in the 2024–25 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’s Office. That falls well short of a sustained, long-term commitment, said Chavez, of the Coalition for Clean Air.
“It's become — especially as the budget has become more difficult — more of a secondary priority, which is unfortunate,” he said.
Competing ideas, no clear consensus
California’s EV problem has no shortage of potential solutions — only disagreement over which one to choose.
Some policy analysts argue the state should focus on first-time adoption. A recent brief from Atlas Public Policy found that incentives are most cost-effective when they bring a household’s first electric vehicle into the garage — because once a family owns one EV, it is far more likely to buy another.
Elkind, of UC Berkeley, said a simpler approach — a point-of-sale rebate tied to lower-priced vehicles — would be easier for the air board to administer while avoiding subsidies for high-income buyers.
“If it's just tied to the price of the vehicle, that's pretty straightforward,” Elkind said.
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 Democrat from El Segundo, said incentives should focus on communities that suffer the most from air pollution, “so as to increase the bang for air quality buck.”
Senator Josh Becker, a Democrat from Menlo Park, said new incentives should go to the people “who are most burdened by transportation costs and drive the most."
Fewer easy EV buyers in California
California needs to design its next rebate program well because its most eager EV buyers are gone and the state now faces a harder, more price-sensitive market, experts said.
“California is one of the first states to sort of get into that mainstream market: and it's a harder market to convert,” said Loren McDonald, a Danville-based EV analyst. Potential buyers now expect seamless charging and balk at waiting 30 to 40 minutes. They also are not keen to install home chargers or pay more upfront. Many, he says, stick with traditional gasoline-powered vehicles.
“We burned through the innovators and the early adopters — those people who want to save the planet, those people who make good money,” McDonald said.
Staff writer Erica Yee contributed to this report.
This article was originally published on CalMatters and was republished under the Creative Commons Attribution-NonCommercial-NoDerivatives license.
