CA Could Exclude Tesla From EV Rebate Program

CALIFORNIA — Tesla may be excluded from Gov. Gavin Newsom's proposal to enact new electric vehicle tax credits if President-elect Donald Trump kills a federal rebate program for EV purchases, according to the governor's office.

Newsom announced plans this week to reintroduce an electric vehicle rebate to replace the $7,500 federal rebate President-Elect Donald Trump has threatened to eliminate. However, under Newsom's plan, the California rebate would exclude makers like Tesla, California's largest electric vehicle manufacturer helmed by Newsom's political antagonist Elon Musk.

The governor's proposal could include a market share cap, and Tesla accounted for more than half of new EVs sold in California in the first three quarters of 2024, according to the California New Car Dealers Assn, the Los Angeles Times reported.

Tesla CEO Musk — who moved Tesla's headquarters from California to Texas in 2021 — was swift to respond on X, which he also owns.

"Even though Tesla is the only company who manufactures their EVs in California! This is insane," he wrote.

Tesla has close to 50,000 employees in California, including more than 20,000 at its Fremont assembly plant in Alameda County.

Musk previously said he supported ending rebates for EVs, oil and gas, Reuters reported.

Newsom's office has defended the proposal, urging that the exclusion of Tesla and other automakers would promote more market competition. However, the decision will be left in the hands of the Legislature.

"The governor’s proposal for ZEV rebates, and any potential market cap, is subject to negotiation with the legislature. Any potential market cap would be intended to foster market competition, innovation and to support new market entrants," his office said.

California's EV rebate program was phased out in 2023, but Newsom is preparing to create a new version. The previous program funded more than 594,000 vehicles, the state said.

"We will intervene if the Trump Administration eliminates the federal tax credit, doubling down on our commitment to clean air and green jobs in California," Newsom said on Monday.

Such tax credits are intended to reduce the sticker price for new vehicles. The state's previous program offered rebates as high as $2,500.

In the third quarter of 2024, Californians bought 115,897 electric vehicles. That accounts for 26.4% of all new vehicle sales in the state, Newsom's office announced.

READ MORE: CA To 'Intervene' If Trump Kills $7,500 Tax Credits

Newsom's proposal to exclude Tesla came as no surprise for many as the pair are frequently seen sparring over issues.

Musk recently ripped into Newsom on X, saying "The Joker is in charge" after the governor banned governments from requiring voters to bring their identification to cast a ballot.

And Newsom previously blasted Musk on X for his new allegiance to Trump over the summer: "You bent the knee." The insult came after Musk announced he was moving his SpaceX and X headquarters to Texas.

"You never get off your knees," Musk returned.

In a shocking twist last month, Newsom actually sided with Musk after the Tesla and SpaceX giant filed a lawsuit against the California Coastal Commission this week after it denied a plan proposed by SpaceX to increase rocket launches off the state's coastline.

Musk and his legal team accused the state agency of "naked political discrimination" after Musk declared his support for former President Donald Trump, according to court documents.

"I'm with Elon," Newsom said.

"Look, I'm not helping the legal case...you can't bring up that explicit level of politics. But you've got to call balls and strikes," he said. "And trust me, I'm not big on the Elon Musk bandwagon right now. So that's me calling balls and strikes."

READ MORE: 'I'm With Elon': Newsom Aligns With Musk In Lawsuit Over SpaceX Launch