California Governor Gavin Newsom has proposed a new electric vehicle (EV) rebate program that could leave Tesla out, reigniting tensions with Tesla CEO Elon Musk.
The plan, announced Monday, aims to offer rebates to EV buyers if federal subsidies are repealed under the incoming Trump administration, reports Bloomberg.
Newsom’s office said the proposal includes market-share limits that may exclude Tesla, which dominates EV sales in California. The details are still being negotiated and could change, but the goal is to encourage more automakers to enter the EV market.
Musk criticized the proposal as “insane” on social media, pointing out Tesla’s manufacturing presence in California. Tesla, which accounts for over half of EV sales in the state, has seen its market share drop recently, with sales falling 12.6% this year while overall EV sales rose 1%.
In 2021, Tesla moved its headquarters to Texas, citing frustration with California’s regulations. The relationship became strained during the COVID-19 pandemic when Musk opposed state-ordered factory shutdowns.
Tesla’s vehicles currently qualify for a $7,500 federal tax credit under President Biden’s climate policy, but Newsom’s plan would replace that if Trump eliminates it. The proposal could also bolster Newsom’s standing among progressives while creating distance from Musk, who has aligned himself with Trump’s administration.
California remains a key battleground for EV policy, representing a large share of the U.S. auto market. Newsom’s plan is part of the state’s ongoing effort to promote clean energy and fight potential rollbacks on environmental regulations under Trump’s incoming administration.
