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How Does the California EV Rebate Work?

Have you ever wondered about the California EV rebates, how they work, and whether or not you qualify for any of them?

This article will break it all down from the types of incentives available, the eligibility requirements, and how to find the various programs.

Read on to find out more.

What the Incentive Program Does

California’s ongoing efforts to create a cleaner environment have impacted the automotive industry. In seeking to reduce vehicle emissions, the state began offering the Clean Vehicle Rebate Project (CVRP) in 2010 as an incentive program to improve public health and cut air pollution.

The incentive program offers rebates for the lease or purchase of new zero-emission vehicles that meet eligibility requirements. Since its inception, the program has provided nearly 402,000 rebates on plug-in, electric, and hydrogen fuel-cell vehicles that have totaled more than $918 million, according to CVRP’s latest figures.

Eligibility for EV Rebates

So who can take advantage of these rebates? Buyers must meet several requirements.

  • California-based. Each buyer, business, nonprofit, or government entity must be based in California or operate a California affiliate at the time of the vehicle’s lease or purchase.
  • Income eligibility requirements. There are also income eligibility requirements that exclude higher-income consumers if their income is above a state rule cap. It ranges from $150,000 for single filers, $204,000 for household heads, and $300,000 for joint filers. The cap affects all eligible vehicle types except for fuel-cell electric vehicles.
  • Higher rebate amounts possible. Consumers with incomes at or below 400 percent of the federal poverty level can receive higher rebate amounts. Higher rebate amounts are also available for plug-in hybrid vehicles, battery electric vehicles, and fuel-cell electric vehicles.
  • The vehicle must be on the list. Additionally, the EV must be on the eligible vehicles list for the leased or purchased car to qualify. As of April 6, several vehicles got removed from the list, including the Hyundai Sonata Plug-in Hybrid (PHEV), the Kia Niro PHEV, and the Toyota Prius Prime.
  • New vehicles only. All vehicles must be registered as new in California, with an odometer reading below 7,500 miles at the time of lease or purchase.

As you might imagine, the program offers a finite amount of funding. Car buyers can apply for the rebate, but the state may put you on a waiting list for the funding.

Consumers can apply for the program online. If accepted, they must own the vehicle in California for at least 30 consecutive months after the lease or purchase date.

If you’re interested in the program, it’s a good idea to check out detailed information on program eligibility.

Beyond the program itself, you can also find other incentives for EV chargers and reduced electricity rates.

Is It Worth It?

Electric and plug-in vehicles often come with a higher price tag. The state designed the incentives to help buyers offset some of that premium. So when you factor in the rebate, along with other savings, it makes sense to consider buying a zero-emission vehicle.

Other savings will come from not visiting the gas pump. Also, drivers can obtain federal tax credits of between $2,500 to $7,500. The federal government also provides up to $8,000 for electric cars powered by fuel cells. Many utilities and local areas also offer incentives.

If you purchase or lease a plug-in hybrid and live in California, you could also be eligible to receive a $1,000 standard rebate. Battery electric vehicles get a standard $2,000 incentive, and hydrogen fuel-cell vehicles get a standard $4,500 break. Lower-income participants could receive as much as $7,000 for fuel-cell EVs, $4,500 for battery-powered electric cars, and $3,500 for plug-in hybrids.

Rebates get delivered as cash when sold or as a check sent out up to a year and a half after purchase or lease.

Another benefit isn’t so much financial, but one of convenience. You may qualify to obtain a Clean Air Vehicle Decal from the California Division of Motor Vehicles. This decal allows you to drive solo in the HOV (carpool) lane, alleviating some of the state’s notorious traffic headaches.

Current And Future Vehicle Marketplace

There’s no doubt that zero-emission vehicles are gaining popularity worldwide as nations try to wean themselves off fossil fuels. But as of 2020, sales of battery, plug-in hybrid, and fuel-cell electric vehicles still tallied just 2.2 percent of new car sales, according to research firm IHS Markit. So the shift will take some time.

But by 2050, experts from IHS Markit predict that 60 to 80 percent of new car sales will be electric. Innovation in battery technology and increased manufacturing scale are critical factors in the projected growth.

General Motors recently announced that it would sell only zero-emission vehicles by 2035.

IHS also said that while the majority of new sales in 2050 will be electric vehicles, about two-thirds of the estimated 1.9 billion vehicles on the road at that time will still be gasoline-powered.

So if you want to be on the cutting edge of green technology, and you’re intrigued by the savings you could rack up on your next car purchase, consider a zero-emission vehicle. It could be a good move for the environment and your wallet.

Read Related Electric Car Stories:


  • How to Claim the California EV Rebate?

    When it comes time to claim your electric car rebate, all you need to do is apply the credit when you file your annual tax return.

  • Is the California Electric Car Rebate Taxable?

    No. When you claim the California electric car rebate, it is completely tax-free.

  • Am I Eligible for the California Electric Car Rebate?

    Well, this all depends on your circumstances, mainly your income. If you make over $150,000 as a single filer, $204,000 for household heads, and $300,000 for joint filers, you will not be eligible for the rebate. Also, if you want the rebate, you will need to check to see if the vehicle manufacturer you are purchasing is still eligible for the rebate.

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