SACRAMENTO, Calif. (AP) — California could offer rebates for electric vehicle purchases if the incoming Trump administration eliminates a federal tax credit for people who buy electric cars, Gov. Gavin Newsom said Monday.
Newsom, a Democrat, proposed creating a new version of the state’s Clean Vehicle Rebate Program, which was phased out in 2023 after funding 594,000 cars and saving 456 million gallons of fuel, Newsom’s office said.
“Consumers continue to prove the skeptics wrong – zero-emission vehicles are here to stay," Newsom said in a statement. "We’re not turning back on a clean transportation future — we’re going to make it more affordable for people to drive vehicles that don’t pollute.”
Newsom’s proposal is part of his plan to protect California's progressive policies ahead of Republican President-elect Donald Trump's second term. He called the state Legislature to convene in a special session to help “Trump-proof” state laws by giving the attorney general’s office more funding to fight federal challenges.
But a budget shortfall could complicate California’s resistance efforts. Early budget projections show the state could face a $2 billion deficit next year, according to a report released last week by the nonpartisan Legislative Analyst’s Office. That’s an improvement from an estimated $46.8 billion deficit the state faced last year, but the shortfall could still curtail the state’s ability to expand new programs and fight federal legal challenges. Legislative leaders in both chambers have said the state needs to stay prudent in anticipation of future budget deficits.
Money for the new rebate system could come from the state's Greenhouse Gas Reduction Fund, which is funded by polluters under the state’s cap-and-trade program, the governor's office said.
Officials didn’t say how much the program would cost or how the rebates would work. Newsom is expected to offer more details of the possible rebate program during an appearance in Kern County later Monday.
California has surpassed 2 million zero-emission vehicles sold, according to Newsom's office. The state has passed policies in recent years to transition away from fossil fuel-powered, cars, trucks, trains and lawn mowers.
Trump previously vowed to end federal electric vehicle tax credits, which are worth up to $7,500 for new zero-emission vehicles. There’s also a $4,000 credit for used ones. But Trump later softened his stance as Tesla CEO Elon Musk became a supporter and adviser.
Newsom's proposed rebates could exclude Tesla and other automakers in an effort to promote more market competition and innovation, according to the governor's office. But that is subject to negotiation with the state Legislature.
Trump criticized Newsom on social media after the governor called for a special session, calling out the high cost of living in California and the state’s homelessness crisis. Trump said Newsom was “stopping all of the GREAT things that can be done to ‘Make California Great Again.’”
Newsom said on his podcast earlier this month that he reached out to Trump after the election. He said at a news conference last week that he still hadn’t heard back from the president-elect.
California's defunct Clean Vehicle Rebate Program offered rebates on electric cars as high as $2,500.
FILE - California Gov. Gavin Newsom speaks during a press conference in Los Angeles, Wednesday, Sept. 25, 2024. (AP Photo/Eric Thayer, File)
FILE - Tesla electric vehicles are charged at a station in Anaheim, Calif., Friday, June 9, 2023. (AP Photo/Jae C. Hong, File)
FILE - An electric vehicle is charged at a parking garage in Los Angeles, Oct. 17, 2018. (AP Photo/Richard Vogel, File)
FILE - California Gov. Gavin Newsom speaks during a press conference in Los Angeles, Wednesday, Sept. 25, 2024. (AP Photo/Eric Thayer, File)
NEW YORK (AP) — Wall Street is set to break more records Monday as U.S. stocks rise to add to last week’s gains.
The S&P 500 was 0.2% higher, as of 3 p.m. Eastern time, and sitting just below its all-time high set two weeks ago. The Dow Jones Industrial Average added 397 points, or 0.9%, to its own record set on Friday, while the Nasdaq composite was 0.1% higher.
Treasury yields also eased in the bond market amid what some analysts called a “Bessent bounce” after President-elect Donald Trump said he wants Scott Bessent, a hedge fund manager, to be his Treasury Secretary.
Bessent has argued for reducing the U.S. government’s deficit, which is how much more it spends than it takes in through tax and other revenue. Such an approach could soothe worries on Wall Street that Trump’s policies may lead to a much bigger deficit, which in turn would put upward pressure on Treasury yields.
After climbing above 4.44% immediately after Trump’s election, the yield on the 10-year Treasury fell back to 4.26% Monday and down from 4.41% late Friday. That’s a notable move, and lower yields help make it cheaper for all kinds of companies and households to borrow money. They also give a boost to prices for stocks and other investments.
That helped stocks of smaller companies lead the way, and the Russell 2000 index of smaller stocks jumped 2%. It’s set to top its all-time high, which was set three years ago. Smaller companies can feel bigger boosts from lower borrowing costs because of the need of many to borrow to grow.
The two-year Treasury yield, which more closely tracks the market’s expectations for what the Federal Reserve will do with overnight interest rates, also eased sharply.
The Fed began cutting its main interest rate just a couple months ago from a two-decade high, hoping to keep the job market humming after bringing high inflation nearly all the way down to its 2% target. But immediately after Trump’s victory, traders had reduced bets for how many cuts the Fed may deliver next year. They were worried Trump's preference for lower tax rates and higher spending on the border would balloon the national debt. .
A report coming on Wednesday could influence how much the Fed may cut rates. Economists expect it to show that an underlying inflation trend the Fed prefers to use accelerated to 2.8% last month from 2.7% in September. Higher inflation would make the Fed more reluctant to cut rates as deeply or as quickly as it would otherwise.
Goldman Sachs economist David Mericle expects that to slow by the end of next year to 2.4%, but he said inflation would be even lower if not for expected tariff increases on imports from China and autos favored by Trump.
In the stock market, Bath & Body Works jumped 19.1% after delivering stronger profit for the latest quarter than analysts expected. The seller of personal care products and home fragrances also raised its financial forecasts for the full year, even though it still sees a “volatile retail environment” and a shorter holiday shopping season this year.
Much focus has been on how resilient U.S. shoppers can remain, given high prices across the economy and still-high interest rates. Last week, two major retailers sent mixed messages. Target tumbled after giving a dour forecast for the holiday shopping season. It followed Walmart, which gave a much more encouraging outlook.
Another big retailer, Macy’s, said Monday its sales for the latest quarter were in line with its expectations, but it will delay the release of its full financial results. It found a single employee had intentionally hid up to $154 million in delivery expenses, and it needs more time to complete its investigation.
Macy’s stock fell 2.9%.
Among the market's leaders were several companies related to the housing industry. Monday's drop in Treasury yields could translate into easier mortgage rates, which could spur activity for housing. Builders FirstSource, a supplier or building materials, rose 6.2%. Homebuilders, D.R. Horton, PulteGroup and Lennar all rose at least 5.8%.
In stock markets abroad, indexes moved modestly across much of Europe after finishing mixed in Asia.
In the crypto market, bitcoin was trading around $96,800 after threatening to hit $100,000 late last week for the first time.
AP Business Writer Elaine Kurtenbach contributed.
FILE - People work on the New York Stock Exchange trading floor in New York on November 21, 2024. (AP Photo/Ted Shaffrey, File)
FILE - The New York Stock Exchange is shown on Wednesday, Nov. 20, 2024, in New York. (AP Photo/Peter Morgan, File)
A currency trader talks on the phone near the screens showing the foreign exchange rates at a foreign exchange dealing room in Seoul, South Korea, Monday, Nov. 25, 2024. (AP Photo/Lee Jin-man)
Currency traders work near the screens showing the Korea Composite Stock Price Index (KOSPI), left, the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Monday, Nov. 25, 2024. (AP Photo/Lee Jin-man)
A currency trader talks on the phone near the screen showing the foreign exchange rate between U.S. dollar and South Korean won at a foreign exchange dealing room in Seoul, South Korea, Monday, Nov. 25, 2024. (AP Photo/Lee Jin-man)
A currency trader walks near the screens showing the Korea Composite Stock Price Index (KOSPI), left, the foreign exchange rate between U.S. dollar and South Korean won and the Korean Securities Dealers Automated Quotations (KOSDAQ) at a foreign exchange dealing room in Seoul, South Korea, Monday, Nov. 25, 2024. (AP Photo/Lee Jin-man)
