California will provide for its citizens $7,500 in rebates for electric vehicles if the incoming Trump administration eliminates the EV tax credit, Governor Gavin Newsom announced Monday.
Trump's reform team has indicated that killing the EV tax credit is a priority, as it is seen as an easy move for the Republican-controlled Congress and could provide cost savings to help offset trillions of dollars in tax cuts that will soon expire. incoming administration is expected to be renewed.
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If Trump implements a $7,500 federal tax credit for EVs, Newsom intends to provide an equal amount to California residents through the state's federal renewal. Clean Car Rebate Project (CVRP)said a press release. That program, which was completed in 2023, financed more than 594,000 vehicles and saved more than 456 million liters of fuel since it was launched in 2010.
The proposed rebates “would include changes to improve innovation and competition” in the EV market and could be paid for through the California Greenhouse Gas Reduction Fund, which draws its money from the state's cap-and-trade program.
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It is not clear that California may include income as a qualifying deduction. Income and MSRP letters were added to the CVRP in its later years to limit the amount of discounts that go to high-earning drivers. And in 2023 the California Air Resources Board (CARB)—which oversees the state's EV promotion programs—said it would expand the Clean Cars 4 All program aimed at low-income drivers in place of the CVRP.
Also left out of this incentive would be all the other states that have chosen to follow California's Advanced Clean Cars II framework for vehicle emissions—and their plug-in vehicle mandates.
Federal tax revenue added to revenue and part of the MSRP as part of its renewal under the Biden Administration's Energy Reduction Act (IRA), which also made for an immediate dealer discount, but sourcing requirements that went into effect in early 2024 also reduced the price. of eligible EVs.
However i The IRA also left the so-called “lease loophole,” which applies the $7,500 rebate to leased EVs even if they wouldn't qualify for the tax credit. That is something that is unlikely to be renewed even in California.