California Governor Gavin Newsom has proposed a new program to offer rebates to electric vehicle (EV) buyers if President Donald Trump repeals federal EV subsidies. The initiative, announced in late November 2024, is designed to encourage the adoption of electric cars in the state.
However, the proposal includes market-share limitations that would exclude Tesla’s vehicles from receiving the rebates. The exclusion is part of Newsom’s plan to create more competitive conditions for other automakers in the growing EV market.
Newsom’s office explained that the proposal, which may still be modified through negotiations with the state legislature, would focus on broadening the market for electric vehicles by incentivizing more manufacturers to enter the market.
The current rebate program, which had been phased out in 2023, would be revived if federal subsidies are repealed under the incoming Trump administration. However, the specifics of the proposal could change as it progresses through the legislative process.
Elon Musk, Tesla’s CEO, has strongly criticized the proposal, calling it “insane” and pointing out that Tesla has a significant manufacturing presence in California. The exclusion of Tesla, which remains the dominant EV seller in the state, could negatively affect the company’s sales, especially as the overall growth of all-electric vehicles slows down.
Newsom Proposes EV Rebates to Counter Federal Cuts, Excludes Tesla to Boost Market Competition
Despite still qualifying for federal subsidies through the Inflation Reduction Act, Tesla’s market share in California has been slipping, with sales down 12.6% in the first three quarters of 2024, even as overall EV sales grew by 1%.
The conflict between Newsom and Musk has been brewing for years. Musk moved Tesla’s headquarters to Texas in 2021, citing dissatisfaction with California’s politics, including disputes over COVID-19 restrictions.
These tensions have escalated, with Musk’s criticisms of Newsom’s policies, which are at odds with the governor’s efforts to promote clean energy initiatives. The exclusion of Tesla from the new rebate program could intensify this rift and further position Newsom as a staunch advocate for environmental policies against Musk’s more libertarian views.
The timing of the proposal coincides with broader political struggles between California and the Trump administration, particularly regarding emissions standards and EV incentives.
Newsom, who has previously clashed with Trump over environmental policies, is preparing for another confrontation as the new president-elect plans to roll back Biden-era regulations, including those on EVs. With more than a third of the U.S. auto market now following California’s stricter emissions standards, the state’s leadership is bracing for another round of legal battles over its right to set tougher environmental rules.
