California has moved to fill the policy void left by the end of federal electric vehicle tax credits, launching a new purchase incentive aimed at first-time zero-emission vehicle buyers. The program, called MyFirstEV, is designed to support the electric vehicle market at a moment when US demand has fallen sharply, automakers have cut capacity plans, and the state’s role as the country’s electric vehicle leader is being tested by political and market pressure.
The initiative comes after the federal electric vehicle tax credit was terminated, removing a support mechanism that had been closely tied to years of electric vehicle market growth in the United States. California, which accounts for about one-third of US electric vehicle sales and has long served as the country’s electric vehicle bellwether, is now using state money and automaker matching funds to try to slow the market’s decline and widen the electric vehicle buyer base.
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California Launches MyFirstEV as Federal Electric Vehicle Support Ends
California Governor Gavin Newsom announced the MyFirstEV electric vehicle purchase subsidy program as the state’s response to the loss of federal support. The program is backed by $135.5 million in dedicated state funds and offers eligible first-time buyers an instant subsidy of up to $3,500. State officials expect the program to benefit about 73,000 purchasers of zero-emission vehicles, a category that covers battery electric vehicles, plug-in hybrid electric vehicles and hydrogen fuel cell vehicles.
The program is administered by the California Air Resources Board, known as CARB, and opened to applications in August. It is structured as a dealer-side discount rather than a post-purchase tax credit, meaning eligible consumers can receive the price reduction at the point of purchase or lease. The funding is allocated on a first-come, first-served basis and ends when the available money is exhausted.
California’s action is significant because the state has long been the largest electric vehicle market in the United States. Its charging infrastructure density, consumer acceptance and regulatory leadership have made it a national indicator for electric vehicle adoption. The new program is intended to prevent the federal policy gap from turning into a prolonged electric vehicle demand slump in the state and, by extension, in the broader US market.
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Federal Tax Credit Withdrawal Sends Electric Vehicle Demand Sharply Lower
The US electric vehicle market had expanded rapidly in previous years in close partnership with federal tax credits. Under the earlier policy, qualifying new electric vehicles could receive up to $7,500 in tax credits, while used electric vehicles could receive up to $4,000. That support narrowed the purchase-price gap between electric vehicles and gasoline vehicles and lowered the barrier for consumers, helping to push US electric vehicle sales higher.
The long duration of the federal incentive also created a strong policy dependence. Many consumers made purchase decisions around federal subsidy rules, and automakers planned production capacity and new-model timelines with those rules in mind. When the federal electric vehicle tax credit ended, the change was abrupt rather than gradual, and the market reacted immediately.
After President Donald Trump began his second White House term in early 2025, his administration moved to cancel or terminate several clean energy support policies. Under the “One Big Beautiful Bill” signed into law in July 2025, the federal electric vehicle tax credit that had lasted for years was terminated on September 30 of that year.
The sudden loss of policy support directly raised the cost of buying an electric vehicle and caused both supply and demand to contract. On the supply side, General Motors, Ford and other automakers urgently reduced electric vehicle capacity plans, postponed new model launches and shifted more resources back toward conventional gasoline vehicles or hybrids.
On the demand side, the market cooled quickly after the rush of purchases that had occurred before the credit ended. Kelley Blue Book data showed that US battery electric vehicle sales fell to 234,000 units in the fourth quarter of 2025, down 46 percent from the previous quarter and down 36 percent from the same period a year earlier. In the first half of 2026, US battery electric vehicle sales totaled 462,900 units, a decline of 23.8 percent year over year, while plug-in hybrid electric vehicle sales fell to 92,000 units, a sharp drop of 43.1 percent.
US Electric Vehicle Sales Decline Cited in Industry Data Period Segment Sales Quarter-over-quarter change Year-over-year change Fourth quarter of 2025 Battery electric vehicles 234,000 -46% -36% First half of 2026 Battery electric vehicles 462,900 Not given -23.8% First half of 2026 Plug-in hybrid electric vehicles 92,000 Not given -43.1% The scale of the decline shows how quickly the US electric vehicle market lost momentum after federal support disappeared. It also explains why California’s state-level electric vehicle incentive is being watched closely. If a large and mature electric vehicle market such as California still needs policy support to sustain demand, the argument for local incentives becomes stronger in other states as well.
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California’s Electric Vehicle Market Feels the Shock Despite Its Scale
California has long held a leading position in the US electric vehicle market. Its electric vehicle registrations account for nearly one-third of the national total, and its charging infrastructure density and public acceptance are higher than those of most other states. For that reason, California is often viewed as the country’s electric vehicle transition bellwether.
Even so, California could not avoid the demand contraction after the federal electric vehicle tax credit disappeared. The state’s electric vehicle consumption experienced sharp swings, its market share fell noticeably, and registrations of several mainstream brands in California dropped by double-digit or even triple-digit percentages. The rapid cooling of a previously strong market highlighted that even a mature electric vehicle market cannot fully detach from policy tools in the short term.
The federal credit had helped make electric vehicles more affordable for a broad range of consumers. When it ended, the effective cost of an electric vehicle rose, and many potential buyers postponed purchases. The impact was not limited to one brand or one price segment. It spread across the electric vehicle market and affected both new and used electric vehicle demand.
California’s new MyFirstEV program is therefore not simply a consumer stimulus. It is also an attempt to protect the state’s electric vehicle market from a policy shock and to maintain momentum while the federal government retreats from electric vehicle support. The program is meant to fill the post-federal policy gap with local funding that is large enough to be visible to consumers and practical enough to be delivered at the dealership.
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How the MyFirstEV Electric Vehicle Subsidy Works
Under the MyFirstEV program, California residents can receive a state subsidy if they buy or lease their first personal zero-emission vehicle from a designated automaker. For a new electric vehicle with a manufacturer’s suggested retail price of no more than $50,000, the subsidy is $3,500. For a used electric vehicle with a transaction price of no more than $25,000, the subsidy is $1,750.
Automakers headquartered in California, such as Lucid and Rivian, are not subject to the new-vehicle price cap. The program therefore includes a targeted exception for companies with strong ties to the state, while the general price caps are intended to focus support on more affordable electric vehicle models.
The state has allocated $135.5 million for the program. In a design feature intended to increase the program’s reach, the state uses a 1:1 matching model with automakers. Automakers that voluntarily join the program must provide equal matching funds, bringing total available support to $270 million. That funding pool is expected to cover about 73,000 new vehicle purchases.
The subsidy is applied as an instant reduction at the dealer rather than as a tax credit that consumers claim after filing taxes. This differs from the previous federal electric vehicle tax credit model and reduces the waiting time for consumers. Buyers can receive the price reduction during the purchase and delivery process at a dealership. The funds are released on a first-come, first-served basis, and the program ends when the subsidy allocation is used up.
MyFirstEV Electric Vehicle Purchase Incentive at a Glance Item Details Program name MyFirstEV State funding $135.5 million Automaker matching funds $135.5 million under a 1:1 matching model Total available support $270 million Maximum new electric vehicle subsidy $3,500 Maximum used electric vehicle subsidy $1,750 New electric vehicle price cap $50,000 manufacturer’s suggested retail price Used electric vehicle price cap $25,000 transaction price Expected vehicle coverage About 73,000 zero-emission vehicles Eligible vehicle types Battery electric vehicles, plug-in hybrid electric vehicles and hydrogen fuel cell vehicles Delivery method Instant dealer-side price reduction Distribution method First-come, first-served until funds are exhausted The program’s structure reflects lessons from earlier electric vehicle incentives. A point-of-sale discount is more immediate than a tax refund and may be more effective at lowering the upfront cost that often discourages first-time electric vehicle buyers. The matching requirement also shifts part of the financial burden to automakers, making the program a shared public-private effort rather than a purely state-funded electric vehicle subsidy.
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Automakers Join the Electric Vehicle Incentive on a Staggered Schedule
More than 10 mainstream automakers have confirmed participation in the MyFirstEV program, but they are joining on different schedules rather than launching at the same time. Hyundai, Lucid, Tesla, Ford, Rivian, Chevrolet and Kia began participating in the electric vehicle subsidy in August. Toyota, Lexus, Honda and Subaru were scheduled to join in September, while Mitsubishi was set to join in November. Nissan and Volvo had not finalized their launch timetables.
The staggered rollout matters for consumers because vehicles ordered or purchased before an automaker officially joins the program cannot claim the incentive. This creates a timing issue for electric vehicle buyers and requires dealers and automakers to communicate clearly about when a brand’s participation becomes active.
The participation list covers a wide range of electric vehicle models and price points, from affordable mainstream electric vehicles to premium models. The program’s new-vehicle price cap of $50,000 applies generally, while the California headquarters exception for Lucid and Rivian allows those automakers to participate without the same cap. The design is intended to balance broad consumer access with support for companies that have strong operational roots in California.
The automaker matching funds also mean that participation is voluntary and commercially calculated. Automakers that join must contribute their own money to the electric vehicle incentive pool, and they must decide whether the program will generate enough additional electric vehicle sales to justify the cost. The fact that more than 10 brands have confirmed participation suggests that automakers see value in the program as a way to support demand during a difficult period for the US electric vehicle market.
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Tesla’s Electric Vehicle Allocation Is Claimed Within Days
The speed with which Tesla’s allocation disappeared offered an early sign of consumer demand for the program. According to information posted on social media by Sawyer Merritt, a Tesla investor and commentator, Tesla began offering the subsidy on August 3. Within three days, 50 percent of the planned available funds had been claimed. By August 8, Tesla’s allocation had been fully used.
The rapid depletion of Tesla’s share of the electric vehicle subsidy shows that California consumers still have strong demand for the brand when a meaningful price reduction is available. It also shows how quickly first-come, first-served electric vehicle incentive funds can be absorbed when a popular automaker activates the program.
The Tesla example does not by itself prove that the entire MyFirstEV program will transform the US electric vehicle market. It does, however, demonstrate that a point-of-sale electric vehicle discount can generate immediate consumer response. For a market that has been weakened by the loss of federal tax credits, that response is an important signal.
The quick exhaustion of Tesla’s allocation may also create challenges for consumers who delay their purchases. Because the program is first-come, first-served and each automaker’s participation is staggered, electric vehicle buyers need to confirm whether funds remain available for the brand and model they intend to purchase. The program’s design rewards early action and may produce uneven outcomes across brands depending on how quickly each automaker’s allocation is claimed.
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First-Time Buyer Design Aims to Expand the Electric Vehicle Base
CARB has a clear policy rationale for targeting first-time zero-emission vehicle buyers. Industry data shows that in previous years, replacement demand accounted for a relatively high share of growth in California’s electric vehicle market. Many subsidies flowed to existing zero-emission vehicle owners, while many households that still used gasoline vehicles had never purchased a zero-emission vehicle.
After the federal electric vehicle tax credit ended, higher purchase costs made this potential new group of buyers less willing to enter the electric vehicle market. MyFirstEV is designed to target these consumers and stimulate new demand rather than simply subsidize households that already own electric vehicles. The goal is to expand the electric vehicle user base and bring more first-time buyers into the zero-emission vehicle market.
This approach could have long-term benefits for the electric vehicle market. First-time buyers who purchase or lease an electric vehicle may become repeat electric vehicle customers in the future. They may also influence friends, family members and neighbors by sharing their experience with charging, maintenance costs and everyday use. Expanding the base of electric vehicle owners is therefore not only a short-term sales strategy but also a way to strengthen the market’s long-term foundation.
Lauren Sanchez, chair of CARB, said California was again leading with bold and decisive action. She said the MyFirstEV program expands the channels through which families can access zero-emission vehicle benefits. According to Sanchez, the program brings California families not only new vehicle technology but also cleaner air for children to breathe, lower vehicle maintenance costs and an opportunity to participate in building a clean-air future for California.
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California and Washington Clash Over Electric Vehicle and Clean Air Policy
The MyFirstEV program is more than a consumer incentive. It is also part of a broader policy struggle between California and the federal government over transportation decarbonization and the electric vehicle transition.
In addition to terminating the federal electric vehicle tax credit, the Trump administration stripped California of its special authority to set its own environmental policies. In June 2025, the administration signed resolutions to block California’s 2035 ban on new gasoline vehicle sales. It also signed other resolutions to repeal California’s low-nitrogen-oxide emission standards for heavy-duty vehicles and engines. California is currently challenging these federal interventions in court.
Against this backdrop, Newsom said California would continue to pursue its own incentive measures. He said the new subsidy is intended not only to protect public health, reduce greenhouse gas emissions and support California-based companies but also to respond to fuel price volatility in the United States caused by conflict in the Middle East and to reduce dependence on oil-producing regions. At a news conference, Newsom reiterated that the core purpose of the state’s purchase subsidy is to give consumers more choices.
The conflict between California and Washington adds uncertainty to the electric vehicle market. Federal policy has turned against the electric vehicle tax credit and against California’s clean air rules, while California is using state funds and legal action to defend its electric vehicle transition. The outcome of this struggle could affect not only California’s electric vehicle market but also the policies of other states that have historically followed California’s vehicle emissions rules.
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Electric Vehicle Registrations Rebound in California in Q2 2026
Despite the political conflict and the loss of federal support, California’s electric vehicle market showed signs of recovery in the second quarter of 2026. A CARB report showed that new zero-emission vehicle registrations in California reached 86,857 in the second quarter of 2026, accounting for 19.1 percent of total new vehicle sales in the state. That share was up 3.3 percentage points from the first quarter.
Battery electric vehicles accounted for the overwhelming majority of the total, with 75,597 registrations. Plug-in hybrid electric vehicles recorded 11,179 registrations, and hydrogen fuel cell vehicles recorded 81 registrations. The figures indicate that electric vehicles remain a substantial part of California’s new vehicle market even after the federal electric vehicle tax credit ended.
California New Zero-Emission Vehicle Registrations in Q2 2026 Category Registrations Share or change All new zero-emission vehicles 86,857 19.1% of new vehicle sales; up 3.3 percentage points from Q1 2026 Battery electric vehicles 75,597 Largest share of the zero-emission vehicle total Plug-in hybrid electric vehicles 11,179 Included in the zero-emission vehicle total Hydrogen fuel cell vehicles 81 Included in the zero-emission vehicle total The California government attributed the rebound in electric vehicle registrations to higher gasoline prices. It also cited the increase as evidence that zero-emission vehicles can help owners avoid the effects of sharp fuel price swings caused by global events. According to a Yale University research estimate, the gasoline-equivalent cost of home charging an electric vehicle in California is only $2.72 per gallon. By comparison, average gasoline prices in California have remained above $4 per gallon for a long period after 2021.
The fuel-cost comparison gives California officials a practical argument for electric vehicle adoption. Electric vehicle owners who charge at home may be less exposed to gasoline price volatility than households that depend on gasoline vehicles. That argument may become more persuasive when fuel prices rise, and it helps explain why California continues to promote electric vehicles even as federal support has weakened.
Newsom said California has already built the largest electric vehicle market in the United States but would not stop there. The state’s continuing electric vehicle registration growth in the second quarter of 2026 suggests that California’s market still has momentum, even if the loss of federal tax credits caused a sharp disruption.
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Public Opinion, Legal Risk and the Wider Electric Vehicle Market
California’s electric vehicle policies are not without controversy. A July 2026 poll by the Public Policy Institute of California found that 66 percent of California adults opposed the 2035 ban on new gasoline vehicle sales, up 17 percentage points from 2021. The survey also showed that some Democratic gubernatorial candidates had reservations about the original timetable.
The poll results indicate that public support for California’s long-term electric vehicle transition is not uniform. While the state has built the largest electric vehicle market in the country, the 2035 gasoline vehicle ban remains a contentious issue. The opposition increase suggests that California officials may face political pressure as they pursue electric vehicle policies and clean air rules.
California has historically led on vehicle emissions regulations. In the past, 17 other states, including Colorado and Minnesota, adopted California’s vehicle emissions rules. California’s decision to launch its own electric vehicle purchase incentive may therefore influence policy debates beyond the state’s borders. It is not yet clear whether other states will follow California and create similar electric vehicle subsidy programs.
The broader US electric vehicle market faces several uncertainties. Federal electric vehicle tax credits have ended, automakers have reduced electric vehicle capacity plans, and political conflict over clean air rules continues. At the same time, California’s experience shows that state-level electric vehicle incentives can produce immediate consumer response, especially when they reduce the upfront price of an electric vehicle at the dealership.
MyFirstEV may help California stabilize electric vehicle demand in the short term, but it cannot fully replace the federal tax credit. The program is limited by its funding, its first-come, first-served structure and its focus on first-time buyers. Its longer-term impact will depend on whether it brings new consumers into the electric vehicle market, whether automakers continue to provide matching funds, and whether California can defend its clean air authority against federal challenges.
The program also highlights a central question for the US electric vehicle market: how much of the transition depends on policy support? California’s experience suggests that even a mature electric vehicle market with strong charging infrastructure and high consumer acceptance can experience sharp demand swings when subsidies disappear. That lesson may shape the decisions of other states as they consider whether to launch their own electric vehicle incentives.
For now, California has positioned MyFirstEV as a bridge across the federal policy gap. The program’s early results, including the rapid exhaustion of Tesla’s allocation, show that consumers will respond when an electric vehicle subsidy is immediate and visible. Whether that response can reverse the broader US electric vehicle downturn remains uncertain, but California’s move has made the state a test case for the future of electric vehicle policy in the United States.