‘This is the energy we need to see more of’: Gov. Gavin Newsom to exclude Tesla from California’s potential EV rebate plan

In response to Donald Trump’s vow to eliminate the federal electric vehicle tax credit, California Gov. Gavin Newsom has proposed implementing California’s own rebate plan. However, Tesla will be excluded from the incentive.

President Joe Biden signed the Inflation Reduction Act in 2022, which made it easier for consumers to access up to $7,500 in tax credits for buying or leasing new or used electric vehicles (EVs). The IRA seeks to create financial incentives for those in the market for EVs due to their environmental friendliness. Under the Act, buyers of qualifying EVs could access a nonrefundable tax credit or transfer the credit to an eligible dealership to lower the vehicle cost and access the savings at the point of sale. However, during his campaign, Trump indicated he disliked tax credits and tax incentives for EVs, calling them “attacks on gas-powered cars.” Even though Tesla is the biggest manufacturer of EVs, Elon Musk supports Trump’s proposal to slash EV tax credits, suggesting it will actually help his company by hurting competitors.

Despite Musk’s assurance that Tesla would fare well under an EV tax credit cut, he seemed quite bothered when Newsom suggested a replacement for the tax credit for Californians, which would exclude Tesla.

Gov. Gavin Newsom proposes replacement for EV tax credit

If Trump eliminates the EV federal tax credit, Newsom will provide a replacement for Californians. California already had a rebate program, The Clean Vehicle Rebate Project (CVRP), to incentivize residents to purchase zero-emission vehicles. However, the program was phased out in 2023 due to exhaustion of funds. On November 25, Newsom promised to bring the program back if the EV federal tax credit is struck down, using funds from the state’s Greenhouse Gas Reduction Fund to provide rebates for customers. He stated:

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. We’re not turning back on a clean transportation future — we’re going to make it more affordable for people to drive vehicles that don’t pollute.

However, the new rebate program would have a caveat. Bloomberg News reported that Newsom was considering including a market share cap for the rebate program, which would exclude some car makers depending on their percentage of EV sales. Considering Tesla still holds the lead in market share by a considerable amount, the market share cap would almost certainly exclude Musk’s company from the rebate. Newsom’s office stated the market share cap would help foster competition and innovation, as it would incentivize consumers to find manufacturers other than Telsa, which dominates the industry. Despite Musk touting that Tesla didn’t need the federal tax credit incentive, Newsom’s exclusion of his company seemed to strike a nerve.

Musk reshared a post calling Newsom a “clown” for excluding Tesla from the EV incentives and commenting that Newsom’s decision was “insane” because Tesla is the only company that manufactures its EVs in California.

Although he stated its purpose was innovation and competition, one of the other perks of the market share cap is that Newsom is sticking it to Musk. Musk was perfectly happy to eliminate the federal tax credit for EVs because he’s a billionaire and knows he’ll fare just fine. So, state politicians like Newsom will have to stand up to help the average American, whom Musk’s and Trump’s plans will harm. However, Musk shouldn’t be surprised to be completely shut out of these incentives and plans when they do so. He supports Trump and removing the federal EV tax credit, so why would Newsom give Tesla’s customers rebates and incentives Musk clearly doesn’t want them to have? On social media, one user noted that “this is the energy we need to see more of” from Democratic politicians.

These state politicians should oppose Trump and Musk’s harmful policies and protect their people. However, when they lessen the blow for their state residents, they should do what they can to keep Trump’s team and supporters barred from these benefits. Musk gets what he voted for, and Californian people keep their tax incentives on EVs — it sounds like the perfect compromise.