Newsom Proposes $200 Million to Offset EV Tax Credit Reductions from Trump Administration

California Governor Gavin Newsom is seeking $200 million to reinstate tax rebates for electric vehicles (EVs) purchased within the state. This initiative aims to compensate for a similar federal program that was terminated by former President Donald Trump last year.

The proposal is contingent upon approval from state lawmakers, who are currently in discussions regarding the broader California budget, with a deadline set for July. Specifics about the new program, including the amount of individual rebates and the types of vehicles that will qualify, are still under consideration, as noted by Lindsay Buckley, a spokesperson for the California Air Resources Board.

“Despite federal interference, the governor maintains his commitment to protecting public health and achieving California’s world-leading climate agenda,” Buckley stated in an email.

Related: ‘Trump’s EPA’ in 2025: A Fossil Fuel-Friendly Approach to Deregulation

Newsom’s stance on utilizing California’s resources to offset the federal EV tax credits cut by Trump has seen some fluctuations. An initial proposal for 2024 included market-share caps that would have excluded Tesla Inc.’s most popular models, prompting criticism from Elon Musk, who labeled the plan as “insane.” This proposal was later abandoned as California’s budget deficit grew, leading Newsom to assert that the state “wouldn’t make up for federal vandalism of those tax credits.”

As the largest EV market in the United States, California’s initiative could significantly benefit struggling manufacturers. Tesla and other automakers have reported slowdowns and declines in electric vehicle sales during the fourth quarter, following the loss of federal incentives. This downturn came after a surge of EV buyers capitalized on an expired $7,500 federal credit.

Related: US Auto Sales Poised to Slip as Middle-Class Buyers Retreat

The Natural Resources Defense Council, an environmental advocacy group, has praised Newsom’s proposal, emphasizing that he “made clear that California will move forward forcefully with our clean energy and climate progress.”

Top photo: Gavin Newsom, governor of California, arrives for a State of the State address on the Assembly Floor at the California State Capitol in Sacramento, California, on Thursday, Jan. 8, 2026. Bloomberg.

Copyright 2026 Bloomberg.

California Governor Gavin Newsom is seeking $200 million to reinstate tax rebates for electric vehicles (EVs) purchased within the state. This initiative aims to compensate for a similar federal program that was terminated by former President Donald Trump last year.

The proposal is contingent upon approval from state lawmakers, who are currently in discussions regarding the broader California budget, with a deadline set for July. Specifics about the new program, including the amount of individual rebates and the types of vehicles that will qualify, are still under consideration, as noted by Lindsay Buckley, a spokesperson for the California Air Resources Board.

“Despite federal interference, the governor maintains his commitment to protecting public health and achieving California’s world-leading climate agenda,” Buckley stated in an email.

Related: ‘Trump’s EPA’ in 2025: A Fossil Fuel-Friendly Approach to Deregulation

Newsom’s stance on utilizing California’s resources to offset the federal EV tax credits cut by Trump has seen some fluctuations. An initial proposal for 2024 included market-share caps that would have excluded Tesla Inc.’s most popular models, prompting criticism from Elon Musk, who labeled the plan as “insane.” This proposal was later abandoned as California’s budget deficit grew, leading Newsom to assert that the state “wouldn’t make up for federal vandalism of those tax credits.”

As the largest EV market in the United States, California’s initiative could significantly benefit struggling manufacturers. Tesla and other automakers have reported slowdowns and declines in electric vehicle sales during the fourth quarter, following the loss of federal incentives. This downturn came after a surge of EV buyers capitalized on an expired $7,500 federal credit.

Related: US Auto Sales Poised to Slip as Middle-Class Buyers Retreat

The Natural Resources Defense Council, an environmental advocacy group, has praised Newsom’s proposal, emphasizing that he “made clear that California will move forward forcefully with our clean energy and climate progress.”

Top photo: Gavin Newsom, governor of California, arrives for a State of the State address on the Assembly Floor at the California State Capitol in Sacramento, California, on Thursday, Jan. 8, 2026. Bloomberg.

Copyright 2026 Bloomberg.