Tesla to be excluded from California EV tax credits under new proposal

Tesla could end up missing out on California’s new set of tax credits for electric vehicles.

California Gov. Gavin Newsom’s office on Monday announced it would propose the tax credits if incoming President Donald Trump removes federal subsidies for EVs. According to the office, the proposal would be similar to California’s Clean Vehicle Rebate Project, which provided nearly $1.5 billion to subsidize EVs but ended in 2023. 

“The governor’s proposal for [zero-emission vehicle] rebates, and any potential market cap, is subject to negotiation with the legislature,” Mr. Newsom’s office said. “Any potential market cap would be intended to foster market competition, innovation and to support new market entrants.”

The bill provided up to $7,500 for customers who lease new battery or fuel cell-powered EVs. The funding helped boost EV sales in the state, even as demand for the cars dropped worldwide. 

Now Tesla could be left out. Since CEO Elon Musk moved his headquarters from California to Texas in 2021, the company would likely not qualify for new EV tax credits in the state. 

Mr. Musk blasted the announcement on Monday, saying any new EV tax credits should go to companies that make their EVs in California. 

“Tesla is the only company who manufactures their EVs in California,” he wrote on X. “This is insane.”

News of revived EV tax credits in California comes as Mr. Trump considers eliminating federal tax credits for EVs. Mr. Musk, a personal adviser to the president-elect, supports that move, despite his company profiting from the policy. 

According to reports, Tesla customers received over $3.4 billion in tax credits before the policy expired for the company in 2019.