California bought a record number of EVs before Trump’s budget cuts

Californians bought a record number of zero-emission and plug-in hybrid vehicles in the third quarter of 2025, taking advantage of their last chance to claim federal tax incentives before they are wiped out under President Trump’s sweeping budget cuts.

Californians bought more than 124,700 zero-emission vehicles or plug-in hybrids from July 1 to Sept. 30, marking the highest quarterly sales of clean vehicles since the state began tracking the numbers in 2008, according to the California Energy Commission. Electric vehicles and long-range hybrids account for 29% of new car sales nationwide, the largest quarter of market share in 17 years.

Consumers flocked to dealerships to take advantage of an expiring, Biden-era tax credit, which offered up to $7,500 toward the purchase or lease of a new zero-emission or hybrid vehicle. The incentives were vital in making EVs more affordable, given that their batteries are made primarily from precious rare earth minerals, adding to sticker prices compared to gas-powered cars.

Now, for the first time in more than a decade, EVs must compete with their gas-powered counterparts without government-sponsored subsidies. Although EV model lineups have expanded and prices have become more competitive, they remain $5,000 to $10,000 more expensive than comparable gas models, raising concerns about whether California will keep pace with its clean car goals.

“Many of the major brands our dealers represent have one or more EVs available today — and many more are in the pipeline,” said Brian Moss, president of the California New Car Dealers Assn. Chairman, who represents more than 1,200 franchised new car dealers nationwide. “So EVs are here to stay. The question is, at what sales level?”

The five countries with the largest share of EV sales were all in the Gulf region. Santa Clara, where nearly 47% of vehicle sales were zero-emission or hybrid, led the way. EV sales were also high in Orange and Los Angeles counties, accounting for approximately 36% and 31% of total vehicle sales in the quarter, respectively.

Tesla remains California’s best-selling EV car brand to date.

But this year its third-quarter sales were down nearly 7% from the same period in 2024. The big winners appear to be Honda and Volkswagen, whose zero-emission sales in California have doubled year over year; Audi wasn’t far behind, with sales up 90%.

Ford also did well, setting national sales records for its electric Mustang Mach-E and F-150 Lightning — more than 15% of which were sold in California.

Moss said he anticipated “gangbuster” third-quarter sales with the impending death of the federal tax credit, which allows for a more than 10% discount on most EV models. But most of those were “preventive” sales — purchases by buyers who would have bought later, if not for the end of federal incentives.

Several American car companies, including Ford and General Motors, have reported that they predict future declines in EV sales, citing federal policy changes.

Moss is among industry experts who agree.

“I think every economist expects it to go down here,” he said. “It’s unclear how much that drop-off will be. Dealers are trying to figure out what the natural level of EV sales is without the credit, and they’re trying to adjust their inventory to reflect that.”

California Auto Retail Group President Jesse Dosange operates 20 dealerships in Northern California that sell many brands, including Chevrolet, Nissan, Acura, Toyota, Infiniti, Ford and Hyundai. During the months of August and September, dealership floors were busier than usual with customers looking for EVs, Dosanjh said. He advised his staff to let customers know that, if they’re ever considering buying an EV or hybrid, they have a limited window to get the best price.

“It’s absolutely a significant amount of money, especially when you look at the lease,” Dosange said. “It’s a few hundred dollars [a month]On average.”

Even with record quarterly sales, this year’s overall sales are still slightly behind 2024.

Tariff announcements, a mixed economic forecast and political backlash against Tesla CEO Elon Musk have contributed to lower EV sales in the first half of the year, according to experts.

Environmental deregulation and disinvestment by the Trump administration have lowered market expectations for EV sales.

In addition to ending the federal tax credit, the Trump administration and federal lawmakers chose not to reauthorize a law that nationally gives EV drivers the privilege of driving only in the carpool lane, a popular benefit for avoiding freeways. Trump also signed a bill that repeals a federal waiver that allows California to require automakers to sell an increasing percentage of zero-emission vehicles to dealerships across the state, starting with 35% of all new vehicle sales in 2026.

Regulatory changes are leaving dealers to rethink the makeup of vehicles on their lots.

“If I were a betting man, I would say that EV demand will decline by a few percent,” Dosanjh said. “To what extent, I don’t know. I don’t think these consumers necessarily won’t buy a car. I think they’ll switch to other hybrid vehicles that provide some benefits, to some extent, for range and savings. And I also see buyers probably looking at cheaper internal combustion engine cars.”

Gov. Gavin Newsom previously promised to restore a state program that provides up to $7,500 to buy clean cars, if Trump repeals the federal tax credit. However, while taking questions from reporters at the Sept. 19 bill signing ceremony, Newsom walked back the pledge.

“We can’t make up for federal erosion of these tax credits,” Newsom said. “But we can continue to make unprecedented investments in infrastructure, which we are doing.”

The governor’s press office did not respond to a request for comment on the change in his position.

California Atty. General Rob Bonta is suing the federal government to roll back California’s zero-emissions vehicle rules. Meanwhile, state regulators are seeking ideas for new ways to encourage EV adoption.

The good news is that the state’s innovative policies and environmentally-minded residents have already made a lasting mark on the industry, said Adrian Martinez, director of the Zero Campaign for Earth Justice, a San Francisco-based environmental nonprofit.

California’s clean air policy is already largely responsible for encouraging automakers to add nearly 150 EV models to their lineups, up from 20 models on the market in 2012. With the state close to 2.5 million zero-emission and long-range hybrid vehicles, Martinez has requested a Kleinian car for the 2008 model year.

“There’s a lot of doom and gloom, especially as we see efforts at the federal level to anchor our electric vehicle industry in this country,” Martinez said. “But a lot of money and effort and time has gone into developing the electric vehicle markets. And it would be crazy for these companies to just give in to these federal pressures and stop selling these cars that consumers want.”

Moss, president of the California Automobile Dealers Association, largely agreed. EVs have become a fixture in California. But car dealers will learn more about how self-sufficient they can be in the coming months.

“I think the long-term future is that EVs will continue to sell well, especially in a state like California,” he said, “but maybe not as much as some were expecting.”