Newsom’s Proposed EV Credit May Cut Out Tesla According To New Plan Clarifications

Governor Gavin Newsom announced earlier on Monday that, should President-elect Donald Trump keep his promise and remove the federal $7,500 zero-emission vehicle (ZEV) tax credit, he would help create a successor version of the state Clean Vehicle Rebate Project (CVRP) to make up for it.

Initially, details were a bit scant. The Governor’s office didn’t delve into cost, who would be covered, how much the credits would be worth, or more technical details. All that was really noted early on was that it would include changes to promote innovation and competition in the ZEV market, and could come from the Greenhouse Gas Reduction Fund, which is funded by oil companies under the state cap-and-trade program.

However, throughout the day, more details emerged, showing that the rebates would not only cost taxpayers a lot based off the cost of the CVRP, but would likely include a market-share cap. This means that large EV makers, including Tesla, could be excluded from the plan. While the Governor’s office added that the proposal would come down to state legislature negotiations in Sacramento, the exclusion of the largest electric car companies from rebates infuriated many on Monday.

“It’s about creating the market conditions for more of these car makers to take root,” said the Governor’s office on Monday.

Some said that Newsom was doing this to exclude Elon Musk, the CEO of Tesla, because of President-elect Donald Trump recently tapping him for a Government position and because of Musk’s support of Trump. However, even if Newsom, who has been a long-time critic of Trump, planned this out without any malice there, the optics are still bad as he is effectively ignoring the state’s largest electric car provider, as well as the only company in the entire state still making cars in California.

On X, Musk was highly critical of the plan, exclaiming that “Even though Tesla is the only company who manufactures their EVs in California! This is insane.”

Tesla also noted that the Federal tax rebate right now does include Tesla vehicles, meaning that California would be purposefully avoiding them.

As of Monday night, Newsom hasn’t confirmed that Tesla would be excluded officially, nor did he respond to the criticism around his plan.

“It is actually unfair in many regards if California decides to pull off the market-share cap,” added Veronica Deer, an auto industry analyst who focuses on the electric market, to the Globe on Monday. “The California rebate plan itself is questionable already. But if they are to have rebates, then include everyone. The idea is to make electric cars more accessible and more prevalent in the state, right? Then let the market dictate that. But no, they’re just adding all these add-ons and restrictions. Either give the rebate or don’t.

“If you do, let the people decide, which the federal credit pretty much does. But don’t just half-ass it.

“As for if this is political. Well, the cap is there to make it look fair for other companies, and it just so happens that one of Trump’s biggest supporters is cut out. Best case scenario it’s just coincidence and it looks bad. But it’s hard not seeing all the dots there and connecting them.”

More on the California rebate plan is to come out soon.