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California’s new EV tax credit proposal may exclude Tesla, despite its dominance in the electric vehicle market. Governor Gavin Newsom suggests the move would encourage competition, as federal subsidy changes loom under Trump-era policies.
California’s EV Tax Credit Proposal Could Leave Tesla Out
In light of President-elect Trump's decision to eliminate the federal tax credit for electric vehicle purchases, a plan is currently being considered by the office of Governor Gavin Newsom that would make it such that California's new state tax credits would not apply to Tesla's electric automobiles.
Reuters reported last month that the $7,500 federal tax credit for electric vehicle purchases is being considered for elimination by Trump’s transition team.
In response to the proposal to exclude Tesla from electric vehicle subsidies, Elon Musk, CEO of Tesla and a key adviser to President Trump, wrote on X, "Even though Tesla is the only company who manufactures their EVs in California! This is insane."
Musk Supports Ending EV Subsidies
Electric vehicle, oil, and gas subsides should be eliminated, according to Musk.
On Monday, Newsom stated that he will suggest revamping California's Clean Vehicle Rebate Program, which subsidized over 594,000 vehicles for $1.49 billion until 2023 and stopped if Trump does away with a federal EV tax credit.
"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," the office stated.
California’s Greenhouse Gas Reduction Fund in Focus
Renting or buying a new plug-in hybrid, battery, or fuel cell electric vehicle in California might cost up to $7,500. This could be covered by the Greenhouse Gas Reduction Fund, which is funded by polluters through the state's cap-and-trade program.
The shutdown of Tesla's Fremont facility during the epidemic and the passage of a law pertaining to transgender children are two examples of the state measures that have sparked tensions between Musk and Newsom.
Musk’s Relocation Plans Highlight Ongoing Tensions
Earlier this year, Musk announced that his other firms, including SpaceX and social media platform X, will relocate their headquarters to Texas after Tesla's 2021 transfer.
Sales of zero-emission vehicles in California have surpassed 2 million, tripling the state's total sales since 2022.
Despite opposition from major automakers, a California official stated last month that he expects the EPA to accept the state's plan to end sales of gasoline-only vehicles by 2035.
California’s Ambitious EV Goals for 2035
Twelve other states have followed California's lead and passed legislation mandating that all new vehicles sold within the state be electric by 2035, with no more than twenty percent of those vehicles being plug-in hybrids, Investing.com points out.
