Tesla Likely to Be Excluded from California's State EV Tax Proposal

Tesla’s electric vehicles may not qualify for California’s new state tax credits under a proposal being developed if President-elect Donald Trump eliminates the federal EV tax credit, Governor Gavin Newsom’s office said on Monday.
Trump’s transition team is reportedly considering the elimination of the federal tax credit of up to USD 7,500 for EV purchases. Tesla CEO Elon Musk, a Trump adviser, has expressed support for ending all subsidies for electric vehicles, as well as for oil and gas industries.
If the federal tax credit is removed, Newsom plans to propose a new version of California’s Clean Vehicle Rebate Program, which ended in 2023 after spending USD 1.49 billion to subsidize over 594,000 vehicles. Newsom’s office stated that any new rebates, including possible market caps, would encourage competition and innovation.
Tesla did not respond to requests for comment, and its shares fell by 1.4% on Monday. California’s previous program offered rebates of up to USD 7,500 for new electric, plug-in hybrid, or fuel cell vehicles, with funding from the Greenhouse Gas Reduction Fund, sourced from polluters.
Musk and Newsom have had disagreements over policies like the shutdown of Tesla's Fremont factory during the pandemic and California's transgender rights legislation. In 2021, Tesla moved its headquarters from California to Texas, and Musk announced this year that SpaceX and X (formerly Twitter) would follow.
California has now surpassed 2 million sales of zero-emission vehicles, doubling its total since 2022. Last month, a state official said the Environmental Protection Agency is expected to approve California’s plan to ban the sale of gasoline-only vehicles by 2035. This proposal, which requires 80% of new vehicles sold in the state to be electric by 2035, has faced resistance from major automakers.