California’s new EV incentive exempts Rivian and Lucid from a price cap that applies to Tesla

California has enacted a new state EV purchase incentive that exempts only “California-headquartered” automakers from a $50,000 price cap, a carve-out that benefits Rivian and Lucid but not Tesla, which moved its headquarters to Austin, Texas, in 2021. The provision was first reported by Teslarati and is confirmed in the text of Senate Bill 168, which passed the California Legislature on June 29, 2026.

How the incentive works

SB 168 directs the California Air Resources Board (CARB) to run a new incentive program for first-time zero-emission-vehicle buyers, funded through the 2026-27 state budget that Governor Gavin Newsom signed in June. Under the bill’s text, new vehicles must carry a manufacturer’s suggested retail price of $50,000 or less, and used vehicles must sell for $25,000 or less, to qualify. CARB sets the actual incentive amount, which manufacturers are required to match; NBC Los Angeles reports the current figures are $3,500 off a new EV and $1,750 off a used one, applied as an instant discount at the point of sale rather than a rebate claimed later. Buyers must certify they have never previously owned or leased an EV.

The headquarters exemption

The bill text creates one exception to the price caps: “incentives under the program shall be provided to California-headquartered zero-emission vehicle companies regardless of the vehicle manufacturer’s suggested retail price or sales price.” A qualifying company is defined as one headquartered in California as of January 1, 2026, whose entire vehicle lineup is zero-emission. InsideEVs confirms that Rivian, headquartered in Irvine, and Lucid, headquartered in the San Francisco Bay Area, both meet that definition, allowing their vehicles to qualify for the incentive regardless of price. Tesla, which relocated its corporate headquarters to Austin in 2021 while continuing to manufacture vehicles at its Fremont, California factory, does not meet the headquarters test and is therefore subject to the standard price caps like any other automaker.

What it means for Tesla buyers

Tesla is not barred from the program. Its vehicles are eligible on the same terms as any non-exempt automaker’s: if the MSRP is at or under $50,000, the vehicle can qualify for the incentive, subject to the buyer meeting the first-time-EV-buyer requirement and other program terms CARB is still finalizing. Current Model 3 and lower-trim Model Y configurations fall under that threshold, while pricier configurations do not. Edmunds lists the Model Y RWD starting at $39,990 and the Long Range/Premium trim at $46,380, both under the cap, while the Model Y Performance trim, at $58,880, exceeds it and would not qualify. By contrast, Rivian and Lucid models qualify for the incentive at any price under the headquarters exemption, including Lucid’s Air and Gravity, which start well above $50,000.

As of early July 2026, the incentive program had not formally launched. CARB is still finalizing the grant agreements with automakers and dealerships required under SB 168 before buyers can claim the discount at the point of sale.

Photo by Luke Miller.