California Governor Gavin Newsom announced Monday plans to restart state electric vehicle rebates if President-elect Trump eliminates the federal $7,500 tax credit, though Tesla (Nasdaq: TSLA) vehicles might be excluded from the program.
The proposed state initiative would match the federal credit amount using funds from California’s Greenhouse Gas Reduction Fund, which is supported by the state’s cap-and-trade program. However, the plan may include a market-share cap that could exclude dominant EV manufacturers like Tesla, which controlled 55% of California’s EV market in the first three quarters of 2024.
Tesla CEO Elon Musk criticized the potential exclusion on X, calling it “insane” and emphasizing that Tesla is the only EV manufacturer in California. The company’s Fremont factory was the nation’s most productive automobile plant in 2021.
The market-share limitation aims to boost competition and innovation, according to the governor’s office. Current EV market share data shows Hyundai and BMW trailing Tesla significantly at 5.6% and 5% respectively in California, the nation’s largest EV market with 35% of all US electric vehicles registered.
The proposal comes as Tesla’s grip on California’s EV market has loosened, with its share dropping from 64% to 55% year-over-year despite overall market growth. Musk, who will co-lead Trump’s Department of Government Efficiency commission, previously suggested that ending federal credits could benefit Tesla by hindering competitors’ growth.
The initiative requires approval from the California Legislature and is Newsom’s latest move to prepare for Trump’s incoming administration. Wall Street analysts, including Wedbush’s Dan Ives, suggest the move could escalate tensions between Newsom and Musk, potentially prompting Tesla to relocate more jobs from California.
Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
