Tesla Inc.’s electric vehicles would be shut out from consumer rebates under a proposal by California Governor Gavin Newsom, pitting the prospective Democratic presidential hopeful against Republican power player Elon Musk.
Newsom on Monday unveiled plans to offer rebates to EV buyers if US President-elect Donald Trump repeals a federal subsidy. A program California phased out in 2023 could be rebooted in lieu of the $7,500 tax credit, the governor said
His office told Bloomberg News that the current proposal includes market-share limitations that would exclude Tesla’s popular EV models. The details — including Tesla’s possible omission from the credits — will be negotiated with the state legislature and could change, Newsom’s office said.
“It’s about creating the market conditions for more of these car makers to take root,” according to the governor’s office. It wasn’t immediately clear if other automakers would be excluded.
Musk, Tesla’s billionaire chief executive officer, posted on his X social-media platform that the proposal was “insane,” citing the automaker’s manufacturing presence in the state.
The move would leave market-leading Tesla out of a key incentive program aimed at spurring wider adoption of EVs at a time of slowing growth for all-electric vehicles. Tesla’s models do qualify for the federal credit, which was introduced as part of President Joe Biden’s signature climate bill, the Inflation Reduction Act.
Excluding Tesla could burnish Newsom’s standing on the left as he renews a clash with Musk, who has become a member of Trump’s inner circle and accepted a role helping the incoming administration cut government spending. Musk has said he’s fine with federal subsidies going away.
“This is a slap in Tesla’s face,” Gene Munster, managing partner of Deepwater Asset Management, said of the California proposal.
California Tension
Tensions between Musk and Newsom have been strained for years, with the Tesla leader moving the automaker’s headquarters to Texas in 2021, in part citing frustration with California’s politics.
Musk had angrily denounced state orders to close Tesla’s Fremont factory during the Covid-19 pandemic, labeling them “fascist” in an earnings call. When Musk announced the headquarters move, Newsom said Tesla owed some of its success to California.
