EV sales bounce back in the US due to surging gas prices, California introduces $3,500 rebate

America's electric vehicle (EV) market is showing its first real signs of recovery since the federal EV tax credit was abolished in September of 2025. According to Cox Automotive, US automakers sold 247,226 EVs between April and June, a 14.2% increase from the previous quarter and the best quarterly showing since the incentive ended. Although sales are 20.5% lower than a year earlier, when the federal EV tax credit was still available, the latest figures suggest the market is adjusting to the loss of government incentives and trending up rather than down.

Driving the turnaround is undoubtedly the sharp increase in gasoline prices. As fuel costs climb to around $5 per gallon on the back of geopolitical tensions in the Middle East, consumers are increasingly reconsidering the long-term savings offered by electric vehicles, even without federal subsidies. However, EVs still only account for a small share of overall US vehicle sales and affordability continues to be a major concern.

That said, California has just introduced a new EV subsidy as part of its "MyFirstEV Zero Emissions Vehicles" program, which will provide instant rebates to first-time EV buyers. Eligible residents purchasing their first electric vehicle priced under $50,000 can receive a $3,500 rebate. The program also extends to used EVs, providing a $1,750 rebate on qualifying used electric vehicles priced under $25,000. Electrek gives a more comprehensive treatment of the topic.

The price caps do not apply to companies solely based in California, which Electrek describes as a move to protect California-based manufacturers and their workers. Tesla, although founded in California, does not benefit from the exemption, as it relocated to Texas in 2021 following Musk's feud with state officials over his refusal to follow COVID-19 pandemic-related guidelines. Hence, only the sub-$50,000 configurations of the Model 3 and Model Y will qualify for the rebate.