California Just Made These 2 EV Brands Much Cheaper — And Neither Is Tesla
With the federal government’s $7,500 electric vehicle (EV) tax credit now expired, buying an EV could become a much tougher financial decision for many Americans. Californians, though, may not have to worry.
The Golden State is stepping in with a new incentive program to keep first-time EV buyers behind the wheel of electric vehicles, with two California-based automakers set to be among the biggest winners.
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Under a new state program, California residents purchasing their first EV could now qualify for thousands of dollars in rebates, with the Rivian Automotive and Lucid Motors brands benefitting the most — and the world’s bestselling EV manufacturer, Tesla, left in the dust.
How California’s New EV Rebates Work
As you may recall, President Donald Trump signed legislation last year eliminating the EV tax credit, which previously provided up to $7,500 for new EV buyers and up to $4,000 for used EV buyers. With that federal incentive no longer available, states like California are attempting to encourage EV adoption through their own programs.
As such, California Governor Gavin Newsom signed legislation to create a $270 million EV rebate program that will provide $3,500 toward qualifying EV purchases (again, for first-time buyers). The program also includes a $1,750 rebate for qualifying used EV purchases as well.
Per Reuters, the incentives apply to new EVs with a manufacturer’s suggested retail price of up to $50,000 and used EVs priced up to $25,000.
California has historically been one of the biggest EV markets in the country. Reuters reported that EVs accounted for about 20% of new vehicle sales in the state last year, with Tesla making up nearly half of those purchases.
Why Rivian and Lucid Will Benefit
While the rebate program includes price limits that could exclude some higher-priced EVs, California-made vehicles will likely receive special treatment.
According to Benzinga, there is a provision in the new program that allows California-based automakers to qualify for the incentives even if their vehicles exceed the normal price caps.
That could be a major advantage for Rivian and Lucid.
Rivian — headquartered in Irvine, California — currently offers the R2 SUV, which starts around $45,000. Some versions of the vehicle exceed the incentive program’s standard $50,000 price limit, meaning the company could benefit from the location-based exemption.
Meanwhile, Lucid is based out of the San Francisco Bay area and sells luxury EVs like the Lucid Air and Lucid Gravity, both start well above the program’s typical price threshold — meaning the California-based would once again give a local EV automaker a better chance of attracting new EV buyers.
So What About Tesla?
While Tesla remains somewhat connected to California, with a factory in the Cali city of Fremont, it moved its headquarters to Texas in 2021. It’s a locational distinction that could make a major difference.
Benzinga noted that Tesla’s relationship with California has become increasingly fraught, with multiple public disagreements between CEO Elon Musk and Governor Newsom. That, along with the fact that Tesla is no longer rooted in California, means that while the world’s most famous EV automaker may be able to utilize the new incentives, it would also be limited by the pricing exceptions in a way that Rivian and Lucid are not.
The Bottom Line
For potential EV consumers, the biggest takeaway here is that the end of the federal EV tax credit doesn’t mean that EV savings have disappeared. California buyers purchasing their first EV may still have a chance to lower the upfront cost — but the biggest beneficiaries likely won’t be the one EV brand that has dominated the market for years.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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