California considers almost doubling its EV incentive as Tesla’s federal tax credit is phasing out

California is the biggest market for electric vehicles in the US. At a time when the electric vehicle federal tax credit is phasing out for Tesla buyers, the state is considering increasing its EV rebate to $4,500.

The state already offers a rebate of up to $2,500 for electric vehicle buyers.

Combined with the $7,500 federal tax credit, some buyers end up saving $10,000 on a new electric vehicle.

But the federal tax credit is starting to phase out for some companies – starting with Tesla, which reached its 200,000th US delivery threshold earlier this year.

In 2019, Tesla buyers will only have access to a $3,750 federal tax credit. GM and Nissan are also expected to hit the threshold soon.

Though Tesla’s home state could compensate for the tax credit reduction.

LA Times reports that California is holding a hearing this week on offering a $4,500 subsidy:

In comments Monday, Mary Nichols, chairwoman of the state’s Air Resources Board, said she hasn’t abandoned hope that Congress will lift the cap so more electric-car buyers can qualify for the federal credit. If not, she said, “we would be having to look at another way to make up for that.’’

They will also look into making the incentive directly available at the point of sale instead of as a rebate with the state – something they have been considering for a while but never implemented.

The move comes as California is trying to fight the federal government over fuel consumption and the transition to electric vehicles as Trump’s administration proposed to freeze fuel economy as asked by automakers.

California is trying to stand its ground as it leads electrification in the US.

Tesla has long been lobbying CARB for them to implement more aggressive goals to reduce fuel consumption, which would also help the company grow in the state.

The automaker has been highlighting its contribution to the state’s economy, which it valued at ‘more than $5 billion’ and over 51,000 jobs last year.

As we reported last month, the Model 3 production ramp resulted in Tesla’s deliveries growing by 139% in California this year.