Tesla Model Y, 3 eligible for $2,000 California rebate after price drops

The Tesla Model Y and Model 3, California’s #1 and #2 best-selling vehicles, are once again eligible for California’s $2,000 electric car rebate after steep price drops last month which bring them back under the MSRP cap for eligibility.

California’s Clean Vehicle Rebate Program has issued over a billion dollars in total rebates since the inception of the program. The money comes from the California Air Resources Board which gets much of its funding from California’s cap-and-trade program.

It has been modified multiple times to add criteria, one of which is a limitation on the purchase price of the vehicle.

Currently, that limitation stands at a base MSRP of $45,000 for cars and $60,000 for “large vehicles” (SUVs, minivans and pickups).

Tesla vehicles previously qualified for rebates under this program, but between continuous price hikes over the past couple years and new MSRP limitations on California’s rebate program, they had been ineligible since March 15, 2022 when Tesla raised MSRP beyond the price caps.

We checked two weeks ago and they were still not included on the site, even after last month’s price drops, as Tesla had not yet re-applied for eligibility for the program.

However, it looks like Tesla applied and was accepted now, as California has now updated the CVRP website to officially add Tesla’s best-selling offerings (and the two best-selling cars in California) back into eligibility for the program after last month’s price drops.

This change is somewhat retroactive, as well. The CVRP website has a topic specifically about the Tesla Model 3 and Model Y, stating that vehicles ordered on or after January 12 (the day of the price drops) can still apply for a rebate within 90 days of registering the vehicle. So if that’s you, then don’t wait – the clock starts from your registration date, not from today.

The standard rebate for both vehicles is $2,000, though every vehicle can also qualify for an “increased rebate” for lower-income buyers, defined as 400% of the federal poverty level. For those buyers, the current total rebate is $4,500, though that is separately slated to raise to $7,500 on February 28.

Other limitations apply, such as an income limit of $135,000 for single filers and $200,000 for joint filers. So low-income buyers get increased rebates, and high-income buyers get no rebate at all. CARB hosts an FAQ about the program if you have any other questions.

The Tesla Model 3 and Model Y both currently qualify for the full federal EV tax credit after recent price drops and a change in IRS guidance which raised that credit’s MSRP cap to $80,000 for the Model Y.

Electrek’s Take

Some may question whether the government needs to be subsidizing the price of two cars which are already the best-selling ones in the state. But these rebates aren’t specific to Tesla, they’re for all EVs, and the program has obviously been effective, given that California is the top EV market in the nation and continues to lead the country in adoption and is one of the largest EV markets in the world.

And the subsidy isn’t from “taxpayers,” but rather largely from California’s cap-and-trade fund, which punishes polluting companies by forcing them to pay penalties when they go over their allocated amount of emissions per year. This fund has been effective at reducing emissions in California, though the state could go further.

And, frankly, nobody ever questions the massive subsidies which California’s former best-selling vehicles still get. The IMF estimates that, globally, dirty energy gets $5.3 trillion in subsidies every year. Studies have shown that each gallon of gasoline benefits from around $3.80 in displaced costs, in the form of increased health costs and environmental damage that all of us have to pay for.

So, lets look at the previous best-selling car in California, the Toyota Camry, and see how much subsidy it would get over its lifetime.

If a Camry lasts 200,000 miles – perhaps a high estimate, but it’s known as a reliable car, so let’s go with it – then that means it will consume 6,250 gallons of gasoline, with its 32mpg combined EPA rating.

So multiply that 6,250 gallons by the $3.80 in displaced health and environmental costs per gallon, and you have $23,750 in subsidy over the lifetime of that vehicle. But that subsidy isn’t being paid by the polluters themselves, via a cap-and-trade fund like the EV incentive is, it’s being paid by your lungs. It’s making your life worse, making you spend more time in the hospital, making you less productive, making your health insurance premiums higher, making your environment less beautiful and able to support human and animal life.

Meanwhile, EVs are doing the opposite of that, and are making California healthier, as a new and completely unsurprising study shows.

So yes, I do think it is more than justifiable to take money out of the pockets of polluters and put it into the hands of buyers who are making a cleaner choice, even if that choice is already a popular one.