California Governor Offers Up Great Reason To Discontinue Federal EV Subsidies

Federal EV tax subsidies may be on the chopping block. However, Governor Gavin Newsom of California has single-handedly solved the problem. Ironically, he also creates a strong argument for discontinuing the long-running federal EV support. 

Trigger warning: The following story may contain facts. 

Electrified vehicles have had the support of American presidents during every administration since 
Bill Clinton first proposed green vehicle tax incentives in 1998. During Presidents Bush, Obama, Trump (45), and Biden, electrified vehicles have had some measure of subsidy using the tax code. Despite pretty much every green vehicle publication and advocate in America being in agreement that EVs are now cost-equivalent or cost-advantaged compared to other vehicles, EVangelists are wringing their hands that the gravy train may finally stop during Trump 47’s administration. Fear not, House Speaker Emerita Nancy Pelosi’s long-lost step-nephew in-law, once removed (sort of), will save the day for residents of the state that love EVs most. 

Background Reading: (2017) Republicans Include Electric Vehicle Tax Benefit In New Tax Law

Governor Newsom proposes that if the EV subsidies now in place were to be sunsetted under a new tax law created by Congress, he would save the planet one EV at a time by simply replacing the federal subsidies with California state subsidies. Here’s what the Governor’s propaganda page says on the subject:

To ensure the state’s continued progress, Governor Gavin Newsom today announced that if the incoming Trump Administration eliminates a federal ZEV tax credit, he will propose creating a new version of the state’s successful Clean Vehicle Rebate Program, which was phased out in 2023. 

Currently, a supermajority of California new vehicle shoppers opt not to buy an EV. Factually, it’s way more than a supermajority, according to the Governor’s website, which says that 73.6% of California residents who bought a new car in the past year opted NOT to buy an EV. Presumably, the three-quarters of vehicle owners in California who don't buy EVs would be happy to use available state funds to subsidize the purchase of an EV by the minority in the state who do.

Another interesting statistic on the Governor's website is that over 30% of all the EVs sold in America are sold in California. Percents of percents get confusing, but if that is true, not many must be sold in the other 49 states, Puerto Rico, and the U.S. territories. When we checked earlier this year, about 93% of Americans were opting not to buy an EV. That margin has been slipping, though. Massive EV sales incentive programs piled on top of the federal and state subsidies are just too good to pass up for many who can live with the shortcomings of a new electric vehicle. Actually, we should say lease a new vehicle. Multiple trustworthy sources say that 80% of new EV transactions are now leases. 

If the incoming Congress and Senate opt to stop federal tax code incentives after 28 years, we will be surprised. Thankfully, Governor Newsom has shown how states that want to keep the "free" money flowing can easily do so. 
 

Image of Governor Newsom from his public page. Image of family with EV courtesy of Jaguar media support. 

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John Goreham is a credentialed New England Motor Press Association member and expert vehicle tester. John completed an engineering program with a focus on electric vehicles, followed by two decades of work in high-tech, biopharma, and the automotive supply chain before becoming a news contributor. He is a member of the Society of Automotive Engineers (SAE int). In addition to his eleven years of work at Torque News, John has published thousands of articles and reviews at American news outlets. He is known for offering unfiltered opinions on vehicle topics. You can connect with John on Linkedin and follow his work on our X channel. Please note that stories carrying John's by-line are never AI-generated, but he does employ Grammarly grammar and punctuation software when proofreading.