A popular EV incentive is in trouble

A federal law giving California electric vehicles (EVs) the right to use HOV (High Occupancy Vehicle) lanes without passengers is set to expire on September 30th. One California legislator wrote a bill proposing a January 1st, 2027, extension of the law’s deadline, but D.C. remains stagnant. California has the highest number of EV registrations, at 1.25 million, which is around 35% of all the US registered EVs. 

According to Calmatters, “This bill leaves in place program guardrails to make sure that ZEVs do not degrade HOV lanes by contributing to their congestion.”

Currently, lawmakers in Washington D.C. haven’t introduced a bill or granted an extension for California’s HOV exemption for EVs and other clean vehicles. California EV drivers are authorized to use HOV lanes with a Clean Air Vehicle (CAV) decal that you apply for online. Plug-in hybrid vehicles (PHEV) and fuel cell vehicles are also eligible for a CAV decal. However, certain high-earning California EV and PHEV drivers cannot access both the CAV and Clean Vehicle Rebate Project’s (CVRP) benefits, according to the state’s DMV.

The CVRP gives rebates on purchasing or leasing new EVs, PHEVs, and fuel cell vehicles ranging from $1,000 to $7,500. Single filers making $150,000 or more, a head-of-household making $204,000 or more, and joint filers making $300,000 or more are limited to the CAV—and not having access to either incentive program may hurt California’s progress toward a mass zero-emission vehicle (ZEV) transition. Income limits to qualify for the US federal clean vehicle tax credit, which President Trump’s administration is considering eliminating, are similar.

California’s number of administered CAV decals has grown significantly since 2019. In 2019, the state issued 98,634 decals compared to 194,486 in 2024, Automotive News reports. Between 2019 and 2024, California issued 683,658 CAV decals. In September, California Governor Gavin Newsom signed a bill into law extending the CAV program through 2026—but the bill hinges on federal approval of the program. 

Slower EV growth rates have some worried about eliminating the CAV decal program

“Allowing ZEVs in HOV lanes has proven to be an incentive for Californians to make the transition to ZEVs. While California leads the country in ZEV adoption, recent reports have indicated a slower growth rate for sales, making it prudent to leave the program in place for an additional year for continued evaluation and to avoid a major disruption of adoption rates,” said Greg Wallis, a California State Representative who is a driving force behind extending the CAV program.

Wallis added during the April Assembly Transportation Committee discussion that “This extension will give us the opportunity to balance ZEV adoption with lane degradation. If access to HOV lanes is one of the most important incentives for ZEV adoption, we shouldn’t risk an abrupt end of this program.” The committee passed the action, with all 15 votes cast in favor.

Final thoughts

While California representatives like Greg Wallis have support from key legislators such as Gavin Newsom, there’s a growing concern about the CAV program contributing toward HOV lane crowdedness, which reduces the lane’s incentive for carpoolers and CAV drivers alike.

“You’re going to reach some point where you’ve exhausted that excess capacity. We’re not at the point where, no matter what we do, it’s totally exhausted, but the challenge to our legislature is how to keep this a meaningful incentive,”John Swanton, an air pollution specialist with the California Air Resource Board’s communications office, said according to Automotive News.