Will California maintain its edge on clean transportation?

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OPINION – California has long defined what clean transportation leadership looks like. But today, that leadership faces a crossroads – and the direction we take will be determined by the upcoming state budget, which will shape whether California maintains its edge or allows global competitors to outpace us.

California has reached an inflection point, a reality echoed by a broad coalition of companies, labor groups, ports, and clean transportation organizations that recently urged Governor Newsom to prioritize ZEV funding in the 2026–27 budget. They know the stakes: Momentum is not guaranteed.

The world is moving quickly. Countries are investing aggressively in batteries, critical minerals, and next-generation manufacturing capacity. China continues to expand its dominance in clean technology manufacturing, scaling quickly and shaping the markets of the future. If California wants the jobs, innovation, and economic competitiveness of the clean transportation era, it cannot afford to hesitate – especially now.
Automakers, fleets, and transportation providers are still investing in a zero-emission future, but federal uncertainty is slowing key decisions and underscoring the need for strong state leadership. Businesses are now looking to Sacramento for signals that the state intends to stay the course and provide the market certainty needed to unlock further investment.

Clean transportation manufacturing, charging deployment, and innovation already supports tens of thousands of California jobs that position the state as a global hub for next-generation technology. These jobs are not abstractions but high-skilled, good-paying careers that support families, strengthen communities, and make California more competitive in a global marketplace.

California’s decision last year to extend the Cap-and-Invest program to 2045 was a major step forward, providing long-term certainty and generating revenues for the Greenhouse Gas Reduction Fund. It is critical that these funds support the state’s core zero-emission transportation programs. But ambition alone is not enough.

A multi-year commitment of $1 billion annually for zero-emission trucks, vans, buses, and passenger vehicles and the necessary infrastructure is essential to avoid backsliding, protect California’s global competitiveness, and ensure fleets and consumers have predictable support as the market scales. This includes sustained investments in mobility solutions that expand access to zero-emission transportation in communities that need it most.

California’s existing incentive programs are among the most effective in the world, helping drivers and fleets adopt cleaner vehicles and lowering costs. But with the loss of key federal incentives – especially the consumer tax credit – the state now has an opportunity to consider how best to support consumers and fleets. Any approach must build on what works, protect medium- and heavy-duty progress, and ensure new efforts complement established programs. And with more long-haul electric truck options expected – options that could reach cost parity with diesel for more applications –the coming year is pivotal.

We are entering what many have called the “Industrial Revolution 2.0,” defined by clean energy, advanced manufacturing, digital technologies, and zero-emission transportation. Few places are as well-positioned as California to shape this era and realize the economic fruits that come with being the global hub for clean transportation. The state has the talent, workforce, innovation ecosystem, and economic engine to lead globally. But leadership is not self-sustaining; it requires partnership and a willingness to invest in what works.

California’s industry leaders have made their position clear: They want to keep building, investing, and innovating in California, but they need the policy stability and market certainty that strong state leadership provides. Their recent letter to the governor reflects a shared expectation that California will reinforce its clean transportation leadership in the 2026–27 budget and beyond so companies can continue investing with confidence.

California has led every major clean technology shift of the last half-century, and the upcoming budget is our chance to show the world we intend to finish the work we started.

Michael Berube is the CEO of CALSTART, a mission-driven clean transportation accelerator working with businesses and governments.