A new battle emerges between two prominent California figures as Tesla faces potential exclusion from the state's electric vehicle incentive program.
According to the New York Post, California Governor Gavin Newsom's proposal to revive the Clean Vehicle Rebate Program specifically excludes Tesla vehicles, prompting CEO Elon Musk to label the decision as "insane."
The proposed plan aims to replace the expired rebate program if Trump follows through with his pledge to eliminate federal tax credits for electric vehicles. Under the previous program, Tesla vehicles accounted for approximately 42% of all rebates distributed through the California Air Resources Board. The revival would offer rebates as high as $2,500 for electric vehicles, matching the earlier program's incentive amount.
Newsom's office justified the Tesla exclusion as a strategic move to promote market competition and allow other manufacturers to establish themselves in the industry. The decision comes at a time when federal EV tax credits provide up to $7,500 for new zero-emission vehicles and $4,000 for used ones.
Dan Ives, senior analyst at Wedbush, characterized the situation as a potential "Game of Thrones battle" between the Democratic governor and the world's richest person. The analyst suggested that the political nature of the decision could influence Tesla's future operations in California.
The tension between Newsom and Musk has deeper roots, extending beyond the current rebate dispute. In 2021, Tesla relocated its headquarters from Palo Alto to Austin, Texas, following disagreements over California's COVID-19 restrictions.
Musk's criticism carries particular weight as Tesla remains the only EV manufacturer with production facilities in California. The company's Fremont plant represents significant employment and economic activity in the state.
The governor's proposal requires approval from the state Legislature, which will debate the terms during a special session. Newsom called this session to address what he terms "Trump-proofing" state laws, including increased funding for the attorney general's office to combat federal challenges.
Trump, who has softened his stance on EV tax credits since gaining Musk's support and counsel, criticized Newsom's special session announcement. He highlighted California's high living costs and ongoing homelessness crisis in his response.
Newsom expressed his commitment to zero-emission vehicles, stating:
Consumers continue to prove the skeptics wrong — zero-emission vehicles are here to stay. We're not turning back on a clean transportation future — we're going to make it more affordable for people to drive vehicles that don't pollute.
Industry analysts warn that the exclusion could potentially trigger further corporate relocations. The situation mirrors Musk's July announcement about moving X and SpaceX operations to Texas, which he attributed to California's policies on gender identity notification in schools.
Governor Newsom's proposed Clean Vehicle Rebate Program revival represents a significant shift in California's approach to EV incentives by excluding its largest manufacturer. The plan awaits legislative approval and faces opposition from Tesla and its supporters.
The outcome of this policy dispute could reshape California's EV landscape, potentially affecting both consumer choices and corporate investment decisions in the state. The tension between promoting market competition and supporting existing manufacturers continues to define the evolving electric vehicle industry in California.
