General Motors’ electric Chevrolet Blazer at a dealership in Colma, California.
© 2026 Bloomberg Finance LP
Electric vehicle sales are booming worldwide but have fallen in the US since the Trump administration scrapped a $7,500 federal rebate last year. California, whose residents buy about a third of the electric vehicles sold in the country, is hoping to fix that with a new incentive set to roll out.
The state budget that took effect July 1 includes $135.5 million earmarked to cover part of the cost of the battery-powered models. It provides first-time buyers of new electric cars and light trucks priced up to $50,000 with a $3,500 rebate – half covered by these government funds, with automakers providing the other half. The $50,000 price limit, however, is lifted for EVs made by California-based companies like Rivian and Lucid, whose cheapest models currently cost $58,000 and $71,000, respectively. Higher-priced models from Tesla, which left the Golden State for Texas in 2021, don’t qualify. Used EV purchases receive a $1,750 rebate.
“The premium for a new EV is still about $5,500 higher than for one [gasoline engine] model, so this doesn’t fill the entire gap, but it should help,” said Stephanie Valdez Streaty, director of Industry Insights for Cox Automotive. “$1,750 for a used EV, given the number of units coming off lease and showing up there, might have a bigger impact.”
Sales of electric vehicles so far this year are down at least 20% from the first half of 2025, according to Cox, a direct result of the end of the federal rebate last September. In the first quarter of the year, California, which wants to eliminate sales of gasoline-powered cars by 2035, saw EVs’ market share drop from nearly a quarter of new vehicle sales a year ago to just 15.7 percent by March. That’s well below the state’s goal of increasing EVs to 35% market share this year.
While the average transaction price for electric vehicles is higher than for gas cars, the number of affordable models is increasing. General Motors has three EVs priced under $50,000, including the midsize electric Blazer SUV, the Equinox compact crossover, and the Bolt hatchback, which costs less than $30,000. Toyota has two small crossovers, the bZ and C-HR models, that start at $40,000, while Hyundai’s popular Ioniq 5 hatchback costs $35,000. Ford’s Mach-E crossover starts at about $38,000, and lower-priced versions of Tesla’s Model 3 sedan and Model Y crossover will also qualify, though its angular Cybertruck will not.
Two low-priced electric pickups, including a new $30,000 model from Ford and a utility version from startup Slate with a base price of $25,000, are set to hit the market in 2027.
While California’s incentives sound good, Loren McDonald, CEO and chief analyst at industry researcher Chargeonomics, is skeptical they’ll make much of a difference.
“If the automakers are already doing a $2,500 or $3,500 incentive because they want these things to move, that might not affect buyers much,” he said. “For example, is Hyundai going to pile it on and add another $1,750 on top of what it already does? Or are automakers only adding it to certain models that don’t sell as well and not others? It really depends on how it’s implemented.”
GM, Ford and Hyundai did not immediately respond to a request for comment. The program is set to begin in the coming weeks, with details to be released next month, said John Swanton, a spokesman for the California Air Resources Board.
