CA GOP, Dem Lawmakers Slam Newsom’s EV Rebate Proposal Excluding Tesla

Republican and Democratic lawmakers across the state continue to denounce Newsom’s proposed electric vehicle (EV) tax credit program on Wednesday, saying that the market-share cap provision would unfairly box out Tesla and other EV makers.

Governor Gavin Newsom announced 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. They did say that it would include changes to promote innovation and competition in the ZEV market, and that funding 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, Tesla CEO Elon Musk was furious. He responded late on Monday on X, saying that “Even though Tesla is the only company who manufactures their EVs in California! This is insane.”

On Tuesday and Wednesday, Musk was joined by not only outraged Californians hoping to use a rebate on an EV car of their choice, but many lawmakers across the state. This included Democratic lawmakers, who usually back Newsom on nearly every issue.

In a thread on X, San Jose Mayor Matt Mahon posted that “I Strongly disagree with excluding Tesla from the proposed program to support EV adoption in California—we want to encourage economies of scale to lower the cost of electric vehicles. Trying to punish Elon Musk by excluding the #1 best-selling EV, Tesla, from a program designed to support EV adoption has no economic rationale. The move is a political stunt.”

Congressman Ro Khanna (D-CA) also added that “Tesla makes over 550,000 vehicles in Fremont in my district & employs over 20,000. Let’s not play politics with keeping manufacturing in California. It would be foolish to exclude Tesla. Have we learned nothing from snubbing Elon Musk at the Biden EV summit?”

With Californians, Musk, and even lawmakers from his own party suddenly opposing his plan, Newsom’s office scrambled over the past few days to clarify his position, doubling down on saying that the market-share cap would be there to help all EV car makers and foster more EV competition in California,

“It’s about creating the market conditions for more of these car makers to take root,” explained the Governor’s office. “Under a potential market cap, and depending on what the cap is, there’s a possibility that Tesla and other automakers could be excluded. But that’s again subject to negotiations with the legislature.”

As Newsom is a major opponent of incoming President Donald Trump, and Musk being a critical ally of Trump, many have charged that this is more political than focused on EV growth.

“Governor Newsom is not really quelling any of the criticism,” added Veronica Deer, an auto industry analyst who focuses on the electric market, to the Globe on Wednesday. “If he really cared about getting more electric cars out there, it would be a cap free rebate and consumers could decide which ones they want. I’ve explained this to several people and the best response I got was actually from a former NFL player who owns a few dealerships. He said that “If this was a game, and the ref saw Newsom do that, he would get a yellow flag for targeting.”

“That’s how it looks to people, and you can understand the lawmaker response, especially those from San Jose and Fremont. Tesla still has a huge presence there, including their West Coast factory. Put politics aside for a second and realize that even though Musk moved the headquarters outside the state, Tesla still has numerous plants and factories in California, not to mention all those dealerships and other other ventures that employ tens of thousands of people and support millions of drivers.

“Newsom says he wants to, what ‘foster competition’?. Well, a lot of other companies offer EV cars and Tesla’s market share is going to naturally go down anyway. It actually is already in California. If Newsom keeps this up, you know who wins? Gas powered cars.”

More on the proposed rebates are expected soon.