Tesla May Be Excluded from California’s New EV Tax Credits, Governor’s Office Indicates

California’s new proposal for electric vehicle (EV) tax credits may leave Tesla out in the cold, according to Governor Gavin Newsom’s office.

If President-elect Donald Trump moves forward with eliminating the federal EV tax credit, California plans to reinstate its own rebate program, but market share limits could prevent Tesla from qualifying. Tesla, which has a dominant share of the EV market in California, could be excluded as part of an effort to foster competition and innovation in the industry.

Tesla CEO Elon Musk criticized the proposal, calling it “insane” in a post on social media platform X, emphasizing that Tesla is the only major EV manufacturer still producing vehicles in California. Tesla’s market share in the state has declined in recent years, but it still accounts for a significant portion of EV sales. However, despite his objection to the exclusion, Musk has also expressed support for the elimination of the federal tax credit, noting that its removal could harm competitors more than Tesla itself.

California’s EV rebate program was phased out in 2023 after funding rebates for over 594,000 vehicles. Newsom’s office confirmed that the new program would be funded by the state’s Greenhouse Gas Reduction Fund, generated from the cap-and-trade system, but the specific details, including eligibility and rebate amounts, remain under negotiation.

This proposal comes amid broader shifts in EV policy, with the incoming Trump administration reportedly planning to eliminate the federal EV tax credit, a key part of the Biden administration’s push for clean energy. While many in the auto industry have urged Trump to maintain these subsidies, Newsom’s office has made it clear that California intends to protect its green transportation policies, even if the federal subsidies are removed. However, the state’s own budget challenges, including a projected $2 billion deficit, could complicate the viability of the new rebate program.

Newsom’s proposal also reflects broader efforts to navigate the anticipated policy changes under Trump’s second term, as the governor has already called for a special legislative session to protect California’s environmental initiatives. With EVs continuing to gain popularity in California—accounting for 22% of all car sales as of September—the state’s efforts to make zero-emission vehicles more affordable for residents may play a key role in maintaining the state’s leadership in clean transportation.

With input from Reuters, the Washington Post, the Associated Press, FOX News, and Business Insider.