New $3,500 EV Rebate Hits California: Why Tesla Gets Left Behind

California is introducing a new program later this summer that will allow first-time electric vehicle buyers to get an immediate discount at the dealership.

Governor Gavin Newsom signed SB 168 into law on Monday, establishing the MyFirstEV program. The initiative provides a $3,500 upfront rebate on new electric vehicles with a manufacturer’s suggested retail price (MSRP) up to $50,000. Buyers looking at used electric vehicles priced up to $25,000 can receive a $1,750 discount.

The program is funded by a $135.5 million state investment from the 2026–27 state budget, which is being matched dollar-for-dollar by participating automakers to create $270 million in total savings.

The instant rebate is part of a larger $600 million clean transportation package funded through California’s Cap-and-Invest revenue and smog-abatement fees. The broader funding package also allocates $150 million for local community air protection projects, $135.5 million for transit incentives like the Clean Truck and Bus Voucher Incentive Project, and $130 million to replace older, polluting heavy-duty engines.

State officials framed the new incentive as a necessary step to maintain California’s momentum in clean energy and keep zero-emission vehicles affordable for working families. The move comes in response to shifts in federal policy, including the prior repeal of the federal EV tax credit.

The state recently surpassed 2.5 million cumulative zero-emission vehicle sales and has expanded its charging network to more than 200,000 public and shared stations across California.

Does This EV Rebate Favor Rivian and Lucid Over Tesla?

The California EV rebate hands out a $3,500 rebate on EVs priced at $50,000 or less, but there’s a carve-out that quietly benefits Rivian and Lucid while leaving Tesla out in the cold.

The exemption applies to automakers headquartered in California that build only zero-emission vehicles. Rivian has its engineering HQ in Irvine and Lucid is based in the Bay Area, so their pricier models get the rebate even though they blow past the $50,000 cap. Tesla moved its corporate headquarters to Austin back in 2021, so it doesn’t qualify. Otherwise, if Tesla was included, its Model 3 and Model Y would be included (except Performance versions).

Here’s the part that stings. Tesla is still California’s biggest EV employer and manufacturer, with a Fremont plant that can crank out more than 650,000 vehicles a year. Rivian and Lucid don’t build cars in California at all. Rivian made 42,284 vehicles in 2025, every one of them in Normal, Illinois. Lucid built 18,378 last year, all of them in Arizona.

Critics say the rebate rewards where a company keeps its mailing address rather than where it actually employs people and builds cars.

The MyFirstEV rebate will become available at participating vehicle dealerships later this summer.