California's new $3,500 EV rebate favors Rivian and Lucid over Tesla

Key Points:

• California Governor Gavin Newsom signed SB 168, establishing the “MyFirstEV” program that offers first-time electric vehicle buyers a $3,500 instant rebate at dealerships, starting later this summer, funded by $135.5 million in state money matched by automakers.
• The rebate applies to new EVs priced up to $50,000 and used EVs up to $25,000, with no income cap, but includes a notable exemption: California-headquartered EV-only automakers like Rivian and Lucid are exempt from the $50,000 price cap, allowing their higher-priced models to qualify.
• Tesla, having moved its headquarters to Texas, does not qualify for the price cap exemption, limiting its rebate eligibility to only its lowest-priced models under $50,000, despite significant manufacturing operations remaining in California.
• The MyFirstEV program is part of a larger $600 million zero-emission vehicle package in California’s 2026-27 budget aimed at boosting EV adoption amid declining federal incentives and a drop in EV market share in the state.
• While the instant rebate and first-time buyer focus are praised for effectively promoting EV adoption, the California-headquarters exemption is controversial, perceived as politically motivated and potentially vulnerable to legal challenges.