California, the leader in the United States for pushing electric cars, may soon offer more money to consumers buying an EV.
According to a Bloomberg report on Tuesday, the state could soon increase the current electric car subsidy from $2,500 to $4,500.
The extra incentive comes as automakers begin phasing out federal tax credits. Currently, the U.S. government awards $7,500 to the buyer of an electric car or plug-in hybrid, depending on battery size. The credits are beginning to run out for some automakers. Tesla was the first to reach the 200,000-vehicle cap and General Motors is closing in, too.
California wants a way to partially make up for the potentially lost incentives.
The funds for an increase would come from companies as they buy more credits to comply with the state’s Low Carbon Fuel Standard, Dan Sperling, a University of California Davis transportation professor and CARB (California Air Resources Board) member said. Further, the extra $2,000 could come directly at the time of purchase, rather than a mail-in rebate. The current funding for the $2,500 subsidy California offers comes from the state’s cap-and-trade program. Companies must also buy credits to reduce carbon-dioxide emissions.
The state still hopes the U.S. government will lift the cap on the $7,500 tax credit. Lawmakers have introduced legislation in the U.S. House of Representatives to extend the tax credits and lift the 200,000-vehicle cap for automakers. The legislation would also apply up to $7,500 at the point-of-sale rather than a tax credit for the owner.
A version of this story originally appeared on Hybrid Cars.