California will hold a hearing this week on offering a $4,500 subsidy for each electric vehicle sold in the state, up from the current $2,500, even as customers from Tesla Inc. and General Motors Co. face the loss of even bigger federal credits.
The federal government now offers a $7,500 tax credit on electric vehicles sold. The credit is designed to start ratcheting downward once the companies have grown enough to sell a total of 200,000 vehicles each. Tesla passed this threshold in July and GM is getting close.
In comments Monday, Mary Nichols, chair of the state’s Air Resources Board, said she hasn’t abandoned hope that Congress will lift the cap so more EV buyers can qualify for the federal credit. If not, she said, “we would be having to look at another way to make up for that.”
The higher California rebates come as President Donald Trump is arguing that only the federal government can regulate tailpipe emission standards or mandate EV sales. Last month, the president also proposed freezing federal fuel economy requirements at 37 miles per gallon in 2020, instead of letting them rise to 47 mpg by 2025 as planned by former President Barack Obama. This would also freeze greenhouse gas limits, but so far, California is refusing to back down.
“At the end of the day, California officials looked at the data, came to a different conclusion than Trump, and are proceeding with the authority they already have under the Clean Air Act,” said Don Anair, research director for clean vehicles at the Union of Concerned Scientists.
The state, the nation’s largest new-vehicle market, is able to consider an increase in its EV subsidy partly because revenue is becoming available as companies buy more credits to comply with the state’s Low Carbon Fuel Standard, said Dan Sperling, a University of California Davis transportation professor who is also a member of the Air Resources Board. At this week’s hearing, the board will consider boosting the required low-carbon content of its transport fuels to 20 percent by 2030, from 5 percent this year.
California may provide this portion of its subsidies directly to consumers at the point of sale, rather than via mail rebates later, as proposed by automakers, electric utility companies and others.