Elon Musk: excluding Tesla from California EV rebate is ‘insane’

Tesla’s electric vehicles would be excluded from new consumer rebates under proposals by Gavin Newsom, the Democratic governor of California.
Shares in Tesla fell 4 per cent on Monday after Newsom’s office suggested that Tesla was not likely to qualify for new state tax credit planned in California if Donald Trump, the president-elect, scraps tax credit for those buying electric vehicles.
Trump’s transition team is understood to be considering eliminating the federal tax credit of $7,500 for EV purchases.
Newsom said that if Trump scraps a federal EV tax credit, he will propose creating a new version of the state’s clean vehicle rebate programme, which ended in 2023 having spent $1.49 billion to subsidise more than 594,000 vehicles.
However, Newsom’s office said the proposal includes market-share limitations that are expected to exclude Tesla’s EV models. A spokesman said: “Any potential market cap would be intended to foster market competition, innovation and to support new market entrants.”
The intervention has pitted Newsom against Elon Musk, the Tesla chief executive who has become a close adviser to Trump.
Musk gave his reaction on X, his social media platform: “Even though Tesla is the only company who manufactures their EVs in California! This is insane.”
He and Newsom have previously clashed over state policies such as the closure of Tesla’s factory in Fremont, San Francisco, during the pandemic and California’s approval of a bill on transgender children.
In 2021 Tesla moved its headquarters from California to Texas. Musk said this year that his other companies, such as SpaceX, will follow suit.
California has recorded more than two million sales of zero-emission vehicles. Last month a state official said he expected the Environmental Protection Agency to approve California’s plan to halt the sale of petrol-only vehicles by 2035.
California’s rules, which have been adopted by a dozen other states, require 80 per cent of all new vehicles sold in the state to be electric by 2035 and no more than 20 per cent plug-in hybrid electric.
Tesla’s shares closed down 4 per cent at $338.59 on Monday.