Democratic Governor Gavin Newsom of California on Monday said his state could offer state tax rebates for electric vehicle (EV) purchases should President-elect Donald Trump and the upcoming administration eliminate the federal EV tax credit.

What Is Newsom Proposing?

Newsom’s proposal seeks to reimagine the state’s previously successful Clean Vehicle Rebate Program, which concluded in 2023 after facilitating the purchase of nearly 600,000 EVs and saving over 450 million gallons of fuel, Newsom’s office said in a ststament.

The funding for the new rebates could come from California’s Greenhouse Gas Reduction Fund, a revenue stream supported by the state’s cap-and-trade system.

Details about the program’s cost and rebate structure remain unclear. However, Newsom is expected to offer further details of the possible rebate program during a scheduled event in Kern County on Monday.

If implemented, the plan would aim to maintain California’s leadership in the clean energy sector, which has already seen the sale of over 2 million zero-emission vehicles.

What Trump Has Said About EV Tax Credits

The announcement comes after Trump on the campaign trail pledged to eliminate federal EV tax credits. These credits are currently valued up to $7,500 for new EVs and $4,000 for used models. However, since Tesla Chief Executive Elon Musk became a major supporter and adviser in the upcoming administration, Trump has softened his stance.

Musk’s journey in the EV industry is closely tied to his leadership at Tesla, a company that has significantly influenced the global automotive landscape. Under Musk’s leadership, Tesla became the world’s leading electric vehicle manufacturer in December 2019.

California’s Defunct Clean Vehicle Rebate Program

The defunct state rebate program previously offered buyers up to $2,500 per vehicle. Newsom’s office has hinted that a revamped version could include new measures to encourage innovation and competition in the EV market.

According to nonprofit Veloz and the California Energy Commission, drivers in California bought a record number of new electric cars in 2023, a total of 446,961, which was a 29 percent increase from the previous year.

California’s potential program comes after Newsom signed a new law in October to help combat soaring gas prices, marking an escalation in his ongoing confrontation with the oil industry over energy costs and the impact of global warming.

California already has the highest average gas prices in the nation with regular gasoline priced at $4.96 per gallon, according to the World Population Review. This is due to a variety of factors, including higher taxes and more strict environmental regulations.

The Golden State has historically led the nation in emissions reduction efforts, partly because of its air quality issues. It is the only state that can implement stricter emissions standards than those set by the federal government.

Trump, however, has pledged to prevent any individual state from setting its own emission rules and from banning gasoline-powered vehicles, a policy California plans to phase in by 2035.

“The world is watching California to see if we will maintain leadership or fracture under internal pressure for perfectionism,” state Senator Henry Stern said in a statement after regulators voted to allow changes to the Low Carbon Fuel Standard earlier this month, per Reuters.

“California has a long history of enacting visionary and affordable climate policies that are durable enough to endure major shifts in national politics like we just witnessed.”

This article includes reporting from The Associated Press.