Tesla electric vehicles in San Francisco on Jan. 23. (David Paul Morris/Bloomberg)
February 2, 2026 4:32 PM, EST
California Gov. Gavin Newsom outlined plans for a $200 million electric vehicle subsidy in the Golden State that would represent a major boost to Elon Musk’s Tesla Inc. and other EV makers in the state.
Under the new program, passenger vehicles priced at or below $55,000 would qualify for the rebate, along with $80,000 for vans, SUVs and pickup trucks and $25,000 for used vehicles, Newsom’s office said in a statement. The cutoff would mean some of Tesla’s most popular models, as well as one variation of its Cybertruck, would qualify for a rebate at current prices.
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The plan, which still needs to be approved by California lawmakers, marks a turnaround for Newsom. In 2024, the Democratic governor had committed to backfilling federal EV tax credits cut by the Trump administration, but an initial proposal would have excluded some of Tesla’s best-selling models. The proposal drew the ire of Musk, who called the plan “insane,” and was later dropped due to budget constraints.
“The Trump administration’s reckless retreat has created unprecedented uncertainty for automakers and families alike,” Sarah Swig, a climate adviser to Newsom, said in a Feb. 2 statement. “California is proud to partner with automakers who are committed to the transition to a zero-emission future through shared investment to keep costs down and drive the market forward.”
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California is the country’s biggest EV market, and Newsom’s proposal would be a boon for struggling manufacturers — in particular for market leader Tesla.
Newsom, who was an early owner of a Tesla, has said that Musk’s company wouldn’t exist if it were not for an earlier version of California’s EV incentive program that started in 2010. “There is no Elon Musk, there’s no Tesla, without California’s regulatory framework,” the governor said last year.
Last year, about 180,000 Teslas were registered in the state, down from almost 203,000 in 2024. Tesla’s registrations outpaced the decline of overall EV registrations in the state, as Tesla faced increased competition and backlash after Musk headed up Trump’s government efficiency initiative, known as DOGE, before a public break with the president. Tesla still sells more EVs than any other automaker in California.
In the San Francisco Bay Area, where Tesla was founded, many vehicle owners added anti-Musk magnets to their cars to distance themselves from the company’s controversial leader.
Tesla announced last week that it will stop building two of its older, more premium EVs, the Model S sedan and Model X SUV, and that it’s converting its factory lines in Fremont, Calif., to production of the two-legged Optimus robot.
Newsom’s latest rebate proposal would require automakers to match California’s incentive amount to participate. The point-of-sale rebate would only be eligible to first-time EV buyers, Newsom’s office said, and the final amount of the incentive will be determined by the California Air Resources Board in coming months.
