California’s $7,500 EV Rebate Proposal: Tesla Could Be Left Out

In the latest developments in California’s potential EV rebate, Tesla CEO Elon Musk has criticized California’s proposed electric vehicle (EV) incentive program, which could potentially exclude the company from receiving state rebates.

The Brewing Complication

Governor Gavin Newsom announced plans to provide a $7,500 rebate for electric vehicles if the federal EV tax credit is eliminated by a potential Trump administration. However, the proposal includes a market-share limitation that would effectively bar Tesla from the incentive, as the company currently holds 56% of California’s EV market.

Musk swiftly responded on X, calling the proposal “insane” and emphasizing that Tesla is the only company manufacturing EVs in California. He suggests the move could threaten jobs at Tesla’s Fremont factory and other California-based teams.

The potential policy comes amid Trump’s transition team indicating plans to repeal the Inflation Reduction Act’s EV tax credit, viewing it as an easy target for cost-saving measures. Interstingly, Musk himself has been lobbying to remove the federal tax credit, arguing that it could ultimately benefit Tesla’s competitive position in the long term.

California’s Incentive Strategy

The proposed rebate program aims to “promote innovation and competition in the Zero Emission Vehicle (ZEV) market.” It would be funded through California’s Greenhouse Gas Reduction Fund, drawing from the state’s cap-and-trade program. The state’s previous Clean Vehicle Rebate Project funded over 594,000 vehicles and saved more than 456 million gallons of fossil fuels since 2010.

Uncertain Future

The proposal leaves several questions unanswered, including potential income qualifications and how it might impact other states following California’s Clean Cars framework. The federal tax credit already includes income and manufacturer price (MSRP) caps, and the state may implement similar restrictions.

Read More: California Plans $7,500 EV Rebate To Counteract Trump’s Potential Federal EV Tax Credit Elimination

With the latest exchanges between Tesla and California continues, the future of EV incentives remains uncertain, with potential significant implications for the EV industry.

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