California to offer a novel $3,500 rebate for first-time EV buyers

California is making a bet: Once you’ve driven an EV, you won’t want to go back to a gas-powered car.

Earlier this month, Gov. Gavin Newsom (D) signed legislation creating the MyFirstEV program. It’s the state’s first big attempt to make up for the loss of federal EV tax credits, and it’s exclusively targeting the key demographic of EV neophytes.

The fine details are still being hashed out in advance of MyFirstEV’s official launch later this summer. But, in broad strokes, the program will offer a $3,500 rebate at the point of sale for a first-time purchase or lease of any new EV that retails for $50,000 or less, and a $1,750 rebate for a used EV selling for $25,000 or less.

The program is funded with $270 million. Half of that will come from the state budget, and the other half — in a rare arrangement — will come from participating automakers, including Ford, General Motors, Honda, Hyundai, Kia, Lucid, Mitsubishi, Nissan, Rivian, Subaru, Tesla, Toyota, and Volvo.

For years, consumers across the nation could get discounts of up to $7,500 for new EVs and up to $4,000 for used EVs. These tax credits were crucial: They could make some new EVs cost-competitive with new fossil-fueled cars.

But the megabill passed by Republicans in Congress last year killed those federal incentives at the end of September 2025, and EV sales have plummeted since.

That poses problems for decarbonization goals held by states like California, as fossil-fueled vehicles are among the largest sources of greenhouse gas emissions in the nation.

The Golden State is not the only one trying to make up for lost tax credits. Programs in Connecticut, Delaware, Illinois, Maine, Massachusetts, New Jersey, New York, Rhode Island, and other states offer incentives and rebates that can reduce the cost of an EV by more than $1,000. Residents of most states can find some form of assistance from government or electric utility programs for vehicles and for home chargers.

California’s new program is notable both because it is by far the nation’s largest EV market and because it’s the first to tie rebates to first-time EV buyers.

That’s according to Rachel Reolfi, senior policy analyst at research firm Atlas Public Policy. She made the case for strategies like MyFirstEV in a December policy paper that argued states will get more ​“bang for the buck” if they limit incentives to first-time buyers.

As Reolfi told Canary Media, this ​“pretty novel concept” makes sense because of a simple fact: ​“When folks buy an EV, they don’t go back to gas cars.”

Survey data supports the point. J.D. Power’s February consumer satisfaction survey shows that 96% of U.S. EV owners would consider purchasing or leasing another EV for their next vehicle. Concerns about range and charging availability also drop significantly once a person starts driving an EV, per analysis from EV-advocacy group Plug In America.

This data helped inform California’s MyFirstEV program, said Dan Krassner, executive director of EVs for All America, a nonprofit research group that commissioned the Atlas report.

By focusing scarce state funds on first-time EV buyers, ​“each rebate buys a customer rather than a transaction,” Krassner said in an email. American EV Jobs Alliance, his group’s advocacy affiliate, ​“took that concept into California and made the case for it with lawmakers, the administration, and coalition partners.”

This approach makes sense, according to Corey Cantor, research director at the Zero Emission Transportation Association trade group. ​“When you leave the early adopters behind and try to hit mass market scale, we know up-front price and charging concerns have been a challenge,” he said. ​“The people we really need to reach are those that have yet to be convinced to drive electric.”

How to make the most of tight state EV-rebate budgets 

Restricting rebates to first-time EV buyers does add some complications.

MyFirstEV will require participants to submit a document attesting that they haven’t previously bought an EV, according to John Swanton, a communications specialist at the California Air Resources Board, the agency administering the program.

It’s possible that some applicants may try to game the program by failing to disclose that they’ve bought an EV before, said Scott Shepard, transportation senior director for the Center for Sustainable Energy, a nonprofit group that manages EV rebate programs in multiple states, including the California Vehicle Rebate Program, which ended in 2023. But there are fairly simple ways to police that, he said, like checking records with the state Department of Motor Vehicles to ​“keep people honest.”

If anything, Shepard said, it’s easier to look up vehicle registration data than it is to enforce the income limits that some other state programs require. MyFirstEV has no income restriction.

Meanwhile, limiting rebates to purchases of new EVs that sell for $50,000 or less helps prioritize people seeking lower-cost alternatives, he said, although the program does waive that limit for vehicles made by companies headquartered in California, which includes Lucid and Rivian.

Including credits for used EVs also helps lower-income buyers, Shepard said. New EVs still cost quite a bit more than their gasoline-fueled counterparts, but used EVs are much cheaper comparatively, particularly as previously leased vehicles start to come back onto the secondary market. ​“Creating used-vehicle options is a great way to distribute air quality and economic benefits,” he added.

Finally, the program will adopt what’s become a best practice for EV incentives: Allowing customers to instantly receive the discount rather than needing to wait to file their taxes to claim the rebate.

“One of the sticky points early on with EV tax credits was that it was a tax credit and not a point-of-sale rebate — and that adds sand to the gears,” said Andrew Garberson, head of growth and research at Recurrent, a company that aggregates data on EV battery health. ​“Making it point-of-sale adds grease instead of sand to the gears.”

Targeting first-time EV buyers may be particularly appropriate for a state where EV enthusiasm is recovering more quickly than the U.S. as a whole, noted Cantor of the Zero Emission Transportation Association. New data from the Newsom administration and from the California New Car Dealers Association shows that EV sales have started to climb back after their post–federal tax credit slump.

What remains to be seen is whether California and other states can help the U.S. automotive industry recover from the federal government’s pullback, Shepard said. But states are inherently more constrained in how much money they can commit to these kinds of programs, which limits their impact.

According to Shepard’s initial analysis of demand for EV incentives from the California car-buying public, the $270 million for the MyFirstEV program will most likely be depleted within less than a year. States may need to commit to ​“funding mechanisms that are more reliable, more stable, perhaps more meaningful,” than what they’ve been able to pull together thus far, he said.

Even a state as wealthy and as central to the EV market as California will struggle to make that happen, Atlas’ Reolfi said. ​“It’s clearly a constrained state budget environment,” she said. ​“But it’s good to see states sending a message.”

In that light, getting automakers to match the state’s $135 million in funding was something of a coup, Cantor said. German automakers have contributed to that country’s government EV subsidy programs in the past, but ​“that hasn’t been done in the U.S. before,” he said.

Krassner of EVs for All America said he has promoted prioritizing first-time EV buyers in testimony before the Maryland Mitigation Working Group, a key body under the state’s Commission on Climate Change.

“California just handed every other state a template that works.”