Federal EV Credit Out, Leaving Blue State Subsidies

From MasterResource

By Kennedy Maize

“A few states are bucking the national trend to prop up, temporarily, EV production. Domestic output is falling, which leaves foreign EV makers. The states do not have the federal “buy American” limit that applies to the batteries and internals of qualified EVs, however, which means that Japan’s Toyota bZ4x and Belgium’s Volvo’s EX30 could be the subsidized winners in an overall declining market.”

Biden administration $7,500 tax subsidy for purchasing electric vehicles, which helped propel a boom in battery electric vehicles (EVs), expired effective October 1st pursuant to the Big Beautiful Bill. Trump has long professed a distaste for this automotive technology, except for his EV photo-op in July when he turned the White House south lawn into a new car lot for Tesla cars to promote Elon and DOGE. (One wonders if Trump actually paid for the bright red, $90,000 Model S that he “bought” on the spot–maybe not.)

Despite the expiration of the federal support for EVs, Inside EVs reports that “a small number of U.S. states will continue to offer their own regional tax credits, rebates, and incentives, allowing their residents to continue offsetting the high cost of EVs compared to gasoline vehicles.”

Colorado

Colorado is actually upping its existing EV rebate to compensate for Trump’s action. On Thursday (Oct. 2), Democratic Gov. Jared Polis announced an increase in the state’s rebate to $9,000 (from $6,000) for a new EV, and $6,000 (from $4,000) for a plug-in hybrid. The rebate, which applies to sales and leases, require a trade-in of a conventional gas- or diesel-fueled vehicle to qualify. The program starts this November 3.

Colorado’s program is less complicated than the now-vanished federal tax credit. It’s a point-of-sale transaction through the state’s Vehicle Exchange Colorado (VCX) program. The program is financed with $25.6 million over the first three years, with more expected to run until June 30, 2032.

The fund’s money comes from fees on rideshare companies and retail delivery services such as DoorDash. It’s insulated from the state’s general fund, which is facing trims in coming years.

Colorado’s plan is also linked to household income. As the Denver Post explains, a household of four must have a yearly income of less than $112,080 to qualify. A single buyer needs to make less than $78,480 annually.

Governor Polis stated:

The market has made it clear. EVs are here to stay. Colorado is a national leader in EVs, expanding access and creating pathways for Coloradans to purchase an EV at low-cost. I encourage all Coloradans who are thinking of buying an electric vehicle or have been holding off: get out there right now.

Colorado has more than 200,000 registered EVs and 25 percent of cars sold so far in 2025 have qualified for the program, which began in the summer of 2023.

Trump’s death sentence for federal tax credits has led to a pre-death sentence boost in EV sales nationally, according to Cox Automotive News. EV sales for the third quarter hit 410,000, or over 10 percent of all automotive sales for the period. That compares to third-quarter 2024 EV sales of 336,000. Expect declines going forward despite certain states bucking the federal action.

Other States

In addition to Colorado, Inside EVs identified nine states with funded programs that continue to operate: Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, New Jersey, New Mexico, and New York.

The publication adds that Minnesota, Washington, and Vermont have programs on the books but have run out of funds, noting, “Some of these states may resume their rebates next year, but that’s uncertain and could require local legislative actions.”

California

California’s generous $7,500 rebate program (with $6,500 for plug-in hybrids and $750 for zero-emission motorcycles) expired in November 2023. According to Kelly Blue Book, there were discussions about reviving it in the faces of Trump’s actions, Democratic Governor Gavin Newsom telling reporters: “We can’t make up for federal vandalism of those tax credits.”

California has typically accounted for more than a quarter of national EV sales. The state will continue building charging infrastructure, Newsom said. But will demand fall short of supply to begin a process of dismantling the (expensive) chargers?

Conclusion

A few states are bucking the national trend to prop up, temporarily, EV production. Domestic output is falling, which leaves foreign EV makers. The states do not have the federal “buy American” limit that applies to the batteries and internals of qualified EVs, however, which means that Japan’s Toyota bZ4x and Belgium’s Volvo’s EX30 could be the subsidized winners in an overall declining market.