California proposes its own EV buyer credit excluding Elon Musk’s Tesla

President-elect Donald Trump’s incoming administration is set to scrap a $7,500 (AUD $11,500) consumer tax credit for EVs, introduced by President Joe Biden.

Newsom announced on Monday that if the federal subsidy is taken away, he will restart California’s Clean Vehicle Rebate Project, which provided its own tax credits for EVS, before it was scrapped in 2023.

The rebates for EV buyers would come from the Greenhouse Gas Reduction Fund, funded by polluters of greenhouse gases under a cap-and-trade program.

But Tesla could be excluded because of market-share limitations – news that did not sit well with the company’s CEO Elon Musk.

“Even though Tesla is the only company who manufactures their EVs in California. This is insane,” Musk responded on X – the social media platform he owns.

The cap would exclude companies whose sales account for a high number of EV sales. For example, Tesla accounted for over 50 per cent of all new EV’s registered in California in the first three quarters of 2024, according to a report from the California New Car Dealers Association. The next highest by comparison was Hyundai with 5.6 per cent.

In his announcement on Monday, Newsom said: “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.

“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.”

Musk has been working closely with the Trump administration and has expressed his support for scrapping the tax credit. He is set to lead a commission aimed at slashing federal spending.