Tesla Likely Excluded from California’s New EV Tax Credits, Governor’s Office Says
In a surprising turn of events, Tesla, the leading electric vehicle manufacturer, may be excluded from California’s proposed new state tax credits for electric vehicles. This development comes as President-elect Donald Trump considers eliminating the federal tax credit for EV purchases.
California’s Response to Potential Federal Changes
On Monday, Governor Gavin Newsom’s office announced that if Trump scraps the federal $7,500 EV tax credit, California will propose a new version of its Clean Vehicle Rebate Program. This program, which ended in 2023, had previously spent $1.49 billion to subsidize more than 594,000 vehicles.
However, the governor’s office indicated that Tesla’s vehicles would likely not qualify for these new state tax credits. This exclusion has sparked controversy and questioned the state’s approach to supporting the EV industry.
Tesla’s Reaction and Market Impact
Elon Musk, Tesla’s CEO, sharply criticized the idea of barring automakers from EV subsidies. He pointed out on X (formerly Twitter) that Tesla is the only company manufacturing EVs in California, calling the potential exclusion “insane.”
The news immediately impacted Tesla’s stock price, with shares closing down 4% to $338.59 and falling another 1.2% in after-hours trading.
California’s EV Market and Future Plans
Despite this setback for Tesla, California’s EV market continues to grow. The state has crossed the 2 million mark for zero-emission vehicle sales, doubling total sales since 2022. EVs now account for 22% of California sales, with 293,000 sold through September 30, 2024.
California’s ambitious plans for the future of transportation include:
- Halting the sale of gasoline-only vehicles by 2035
- Requiring 80% of all new cars sold in the state to be electric by 2035
- Allowing no more than 20% of new vehicles to be plug-in hybrid electric by 2035
Newsom’s Commitment to Clean Transportation
Governor Newsom has clarified that California will not back down from its commitment to clean transportation. He 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.”
The governor plans to relaunch the Clean Vehicle Rebate Program to fund these new EV credits. This move demonstrates California’s determination to maintain its leadership in the transition to electric vehicles, even in the face of potential federal policy changes.
Challenges and Considerations
While California’s commitment to clean transportation is commendable, the state faces some challenges:
- Budget constraints: California is facing a $2 billion budget deficit next year, which may impact the scope of the proposed EV incentives.
- Market competition: Tesla’s potential exclusion raises questions about how the state plans to foster market competition and support new market entrants.
- Political tensions: The clash between Newsom and Musk over various state policies highlights the complex relationship between government and industry in the EV sector.
As California moves forward with its plans, it must balance its environmental goals with economic realities and ensure fair treatment of all EV manufacturers. The coming months will be crucial in determining the future of EV incentives in the state and their impact on the broader automotive industry.