California EV Incentive Program: USD 200 Million Plan Targets First-Time Buyers

On February 2, the administration of California Governor Gavin Newsom announced a proposed USD 200 million California EV incentive program designed exclusively for first-time electric vehicle buyers, with participating automakers required to provide matching incentives. The initiative is positioned as a targeted response to affordability challenges in the state’s evolving electric vehicle market.
The proposal is intended to help offset upfront purchase costs for both new and used electric vehicles, although the exact incentive values have not yet been disclosed. Vehicles eligible under the California EV incentive program will be subject to price caps established by Congress in 2022, ensuring that subsidies are directed toward mass-market adoption rather than premium segments.

Policy Shift Following Federal EV Credit Changes

California’s move follows the conclusion of federal electric vehicle tax credits, which ended on September 30. The termination included the USD 7,500 credit for new EVs and the USD 4,000 incentive for used EVs, a change that significantly altered consumer purchasing behavior across the US EV market.

Impact on EV Sales Momentum

Following the federal policy shift, EV sales initially saw a short-term increase before declining sharply during the final quarter of 2025. This volatility highlighted the growing importance of state-level electric vehicle incentives in maintaining adoption momentum, particularly among cost-sensitive first-time buyers.

Regulatory Landscape and OEM Engagement

The policy environment has also shifted at the federal level. In June 2025, legislation signed by former President Donald Trump blocked California’s electric vehicle sales mandates. A subsequent announcement in July confirmed that automakers would not face penalties for failing to meet fuel-efficiency standards dating back to 2022.

Automaker Discussions on Future Compliance

Against this backdrop, the California Air Resources Board held discussions in Detroit with Ford, General Motors, and Stellantis at the end of January. The meeting focused on aligning future plans as California evaluates incentive-based approaches to support electric vehicle adoption amid regulatory and market uncertainty.