Governor Newsom is laying the groundwork for California to be a leader among liberal states in reacting to President-elect Trump’s agenda, saying the Golden State will offer its own electric vehicle subsidy if the federal EV tax credit is killed. 

In a statement Monday, Mr. Newsom said, “We will intervene if the Trump administration eliminates the federal tax credit, doubling down on our commitment to clean air and green jobs in California.”

“We’re not turning back on a clean transportation future — we’re going to make it more affordable for people to drive vehicles that don’t pollute,” he added. 

The governor explained he would propose to revive California’s Clean Vehicle Rebate Program that ended in 2023. He said that state-wide incentive “funded more than 594,000 vehicles.” The nonprofit California-based news outlet CalMatters reports the program handed out $1.2 billion in EV rebates.

Trump and his transition team are reportedly planning to end the federal EV tax credit. The subsidy was established under the Inflation Reduction Act, which means it would require Congressional action to eliminate it. 

The EV credit was established as part of Biden’s green energy push, and it was designed to incentivize the purchase or lease of electric vehicles. The incentive applies to 15 electric vehicle models and six hybrid models, according to Car and Driver. 

Trump promised during the campaign to kill the 46th president’s “EV mandate.” As part of that goal, he wants to eliminate the EV credit. He also wants to extend the tax cuts that were passed during his first term in office, and Reuters notes the repeal of the EV credit could help pay for the tax cut extension. Republicans are expected to put a tax bill at the top of their agenda items to tackle first, the outlet notes. 

Trump’s plan to eliminate the credit is supported by Tesla. Representatives for the company, which is the largest EV maker in America, told Reuters the company supports the decision to end the credit. 

A portfolio manager of Purpose Investments, which invests in Tesla, Nicholas Mersch, explained to Reuters that killing the subsidy would probably help Tesla retain its position as the largest EV maker in America.

Other companies such as Ford and GM have not been able to bring down the cost of manufacturing as Telsa has, and they have benefited from the tax credits, which helped to make their EVs more appealing to potential buyers, who might otherwise be turned off by their costs.

Kelly Blue Book reports the average price of an EV as of October 2024 was s $56,902, as opposed to $48,623 for a gas-power vehicle. 

A group of economists from Duke, Stanford, UC Berkeley, and the University of Chicago estimated the impact of the end of the EV tax credit. They projected the end of the subsidy would lead to a 27 percent drop in electric vehicle sales. 

Besides the EV subsidy, Mr. Newsom is already taking steps to “Trump-proof” California by giving the state’s attorney general more funding to fight the incoming administration’s policies in federal courts.