Gavin Newsom's Next Move Could Expand California's EV Rebate

A new law that would expand California's electric vehicle rebate hinges on the approval of Governor Gavin Newsom.

Newsom has until September 30 to approve or deny AB 2401, which would expand the state's Clean Cars 4 All program.

"The bill aims to direct more rebates to low-income households in communities with poor air quality," Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek. "These programs are seen as essential for promoting cleaner transportation and are designed to funnel more funding into lower-income areas."

If passed, the legislation would grant higher rebates for those who drive longer distances and have older vehicles.

The bill would also require the state to show the results from the program's changes and funding amounts available to the public.

"Clean car rebates have previously gone to drivers who typically don't need the financial help," Assemblymember Philip Yu-Li Ting said, as reported by local station KEYT. "Now is the time to turn our attention to working families who often live in areas with poor air quality and cannot afford to switch to a zero-emission vehicle. Investing in them will bring fairness and equity to the program, while also accelerating the environmental benefits for the state."

Currently, roughly 15 percent of the state's EV rebates go to low-income residents, and lawmakers are hoping that more of the rebate money can go to these communities.

"The main challenge for this system is that, despite the rebate, driving an EV may not be feasible for low-income households due to the lack of charging infrastructure and the high costs associated with switching to an EV," Thompson said.

"Most low-income families cannot afford to switch to a new or used EV without substantial assistance, and even then, barriers such as charging access, insurance, and general maintenance costs remain significant obstacles."

The bill also seeks to incentivize those with older vehicles to retire their cars from the road in favor of more environmentally friendly modes of transportation.

Cars that were made before 2004 only comprise less than 20 percent of the vehicles on the road but contribute more than 70 percent of smog-creating nitrogen oxides, according to a study from the Greenlining Institute and the Union of Concerned Scientists.

Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, said the rebate is similar to those in other states as governments look to be more accommodating to those who truly need the assistance.

"While it's great to give all taxpayers relief on a purchase that's seen as helping the environment, there are obviously some that are more economically disadvantaged than others," Beene told Newsweek.

"This bill looks to target more lower income vehicle purchasers, while also expanding transparency of where these funds are going at state and local levels. It's a step in the right direction, as it not only encourages Californians to be more eco-friendly, but also makes the purchase more appealing to families that have a difficult time affording any vehicle, let alone an electric one."