Elon Musk has fired back at new plans to introduce an electric car rebate programme which would exclude Tesla following President-elect Donald Trump’s plans to scrap a nationwide EV grant scheme.
On Monday, California Governor Gavin Newsom said he would offer state rebates to EV buyers if President-elect Donald Trump repeals federal subsidies after taking office in January next year.
Newsom’s office confirmed to Bloomberg News that market-share limitations in the current proposal would shut out Tesla’s popular models from the consumer rebates.
The move sets up a direct confrontation between the Democratic Governor and Tesla founder and CEO Elon Musk, who has become a member of Trump’s inner circle.
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Elon Musk has spoken in favour of Donald Trump’s plans to remove the federal EV grant
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The proposed plan would revive California’s Clean Vehicle Rebate Program, which ended in 2023 after providing $1.49billion (£1.18billion) in subsidies for more than 594,000 vehicles.
The initiative would serve as a replacement for the federal $7,500 (£5,958) tax credit if Trump proceeds with plans to eliminate it.
“The Governor’s proposal for ZEV rebates, and any potential market cap, is subject to negotiation with the legislature,” Newsom’s office stated.
The office added that any market cap would be “intended to foster market competition, innovation and to support new market entrants”.
The programme’s exact costs and whether it would match federal provisions, such as the $4,000 (£3,177) tax credit for used EVs, remain unclear.
Musk swiftly condemned the proposal on his X social media platform, calling it “insane” and emphasising Tesla’s manufacturing presence in California.
The post stated: “Even though Tesla is the only company who manufactures their EVs in California! This is insane.”
The exclusion would leave market-leading Tesla out of a key incentive programme aimed at spurring wider adoption of EVs during a period of slowing growth for all-electric vehicles.
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Tesla’s models currently qualify for the federal credit under President Biden’s Inflation Reduction Act, although the brand is showing signs of decline.
The company’s sales in California dropped 12.6 per cent during the first three quarters compared to the previous year.
This decline occurred even as overall electric vehicle sales in the state rose by one per cent, according to the California New Car Dealers Association.
Tesla accounted for 54.5 per cent of all EVs registered in the state during the first three quarters, down significantly from 63 per cent during the same period last year.
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California Governor Gavin Newsom has introduced new proposals to deal with electric car grants
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California has reached a significant milestone in zero-emission vehicle adoption, surpassing two million total sales and doubling its figures since 2022.
EVs now represent 22 per cent of California sales, with 293,000 vehicles sold through September 30. The state aims to have 80 per cent of all new vehicles sold to be electric by 2035, with no more than 20 per cent being plug-in hybrids.
Gene Munster, managing partner of Deepwater Asset Management, reacted to the California proposal from Governor Newsom, saying: “This is a slap in Tesla’s face.”
