Sales of electric vehicles are booming worldwide, but have plunged in the U.S. since the Trump administration eliminated a $7,500 federal rebate last year. California, whose residents buy about a third of EVs sold in the country, hopes to rectify that with a new incentive it’s about to launch.

A state budget that went into effect on July 1 includes $135.5 million earmarked to defray some of the cost of battery-powered models. It provides first-time buyers of new electric cars and light trucks priced up to $50,000 with a $3,500 rebate–half covered by those state funds, with automakers providing the other half. The $50,000 price limit, however, is waived for EVs made by California-based companies such as Rivian and Lucid, whose cheapest models currently cost $58,000 and $71,000, respectively. Higher-priced models from Tesla, which left the........

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