Musk, Lawmakers Criticize California’s EV Rebate Program, Which Might Exclude Tesla

California Gov. Gavin Newsom (L) and Tesla CEO Elon Musk (R) are seen in a combination photo. Mike Blake/Joe Skipper/Reuters

California Gov. Gavin Newsom’s announcement on Nov. 25 to reinstate a zero-emission vehicle rebate and possibly exclude Tesla from the program has sparked criticism from CEO Elon Musk and other officials.

“Even though Tesla is the only company who manufactures their EVs in California! This is insane,” Musk posted on X Monday.

Newsom’s announcement called for restarting the state’s rebate program to bring down the price of electric vehicle purchases if the incoming Trump administration removes federal incentives.

“We will intervene if the Trump Administration eliminates the federal tax credit, doubling down on our commitment to clean air and green jobs in California,” Newsom wrote in a statement Monday.

The state was issuing up to $7,500 in tax credits to buy or lease a new plug-in hybrid electric, battery electric, or hydrogen fuel cell electric vehicle, but the state phased out the program in 2023 after helping to fund nearly 600,000 vehicles, according to Newsom’s office.

However, according to the governor’s office, Tesla—the state’s only major electric vehicle manufacturer which also sells the most EVs in the state with nearly 55 percent of the market’s share—could be excluded from the new state rebate program in order to foster market competition. The state Legislature would have to step in and create a new program.

Officials from both sides of the political aisle responded to Newsom’s announcement that Tesla might be excluded from a future program. Newsom and Musk have recently clashed over policy differences, which led to the Tesla and SpaceX CEO’s decision to relocate to Texas.

U.S. Rep. Ro Khanna, a Democrat who represents Santa Clara and Alameda counties in Northern California, said the state’s manufacturing sector should not be ruled by politics.

“Tesla makes over 550,000 vehicles in Fremont in my district & employs over 20,000. Let’s not play politics with keeping manufacturing in California. It would be foolish to exclude Tesla. Have we learned nothing from snubbing [Elon Musk] at the Biden EV summit?” Khanna posted on X Monday.

The automaker employs over 40,000 in the state.

U.S. Rep. Kevin Kiley, of Rocklin, California, also responded to the possibility of Tesla’s exclusion from the state’s program.

“It is stupid, petty, corrupt, and counter-productive. Classic Newsom,” Kiley wrote as part of a post on X Tuesday.

Rep. Ro Khanna (D-Calif.) speaks in Washington on June 11, 2024. Khanna responded to Gov. Gavin Newsom's announcement Nov. 25 to create a new electric vehicle rebate program that might exclude Tesla, saying politics should be left out of the state's manufacturing sector. Allison Bailey/Middle East Images/Middle East Images via AFP

According to Newsom’s office, the new state program could include changes to promote innovation and support new companies in the zero-emission market.

The program’s funding is expected to come from California’s Greenhouse Gas Reduction Fund, which collects money from companies that exceed emission limits established by the state from the state’s cap-and-trade program.

President-elect Donald Trump has floated the idea of stopping programs aimed at eliminating gas-powered cars.

First established in 2005 by President Barack Obama’s administration, the federal tax credits have increased from $3,400 to $7,500 today. The credits have been extended to 2032.

Trump’s transition spokeswoman Karoline Leavitt told The Epoch Times Monday that Trump “will support the auto industry, allowing space for both gas-powered cars and electric vehicles.”

Travis Gillmore contributed to this report.