California Governor Gavin Newsom is preparing to revive the state’s electric vehicle (EV) rebate program if President-elect Donald Trump follows through on his promise to eliminate the federal EV tax credit. Newsom emphasized that if the $7,500 federal credit is removed, California will reintroduce its own rebate program, which was phased out in 2023.
“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 stated. “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.”
The new rebates would be funded by California’s Greenhouse Gas Reduction Fund, which is sourced from the state’s cap-and-trade program, where polluters contribute to funding green initiatives. However, the proposal could come with limitations that may exclude Tesla, the state’s largest EV maker, due to a market-share cap.
Tesla’s potential exclusion stems from a proposal that could limit rebates to companies with a smaller market share in the EV market. According to the California New Car Dealers Association, Tesla accounted for nearly 55% of all new EV registrations in the state during the first three quarters of 2024. This is a decline from 64% in 2023, while competitors like Hyundai and BMW have much smaller shares of the market, around 5% each.
The governor’s office confirmed that a market-share cap would aim to foster competition and innovation in the EV industry. However, the exact parameters for such a cap are still under discussion and would be subject to legislative approval.
Elon Musk, the CEO of Tesla, criticized the exclusion, calling the proposal “insane” in a post on X. Musk, who has supported ending the federal tax credit, said that removing it could actually benefit Tesla by reducing competition. In the past, Musk has argued that the credit might hurt Tesla’s rivals more than the company itself, a sentiment he reiterated in July during an earnings call.
In addition to advocating for the EV rebate, Governor Newsom has positioned himself as a critic of the incoming Trump administration. After Trump’s election victory, Newsom called for a special session of the California legislature to discuss measures to protect the state from potential federal rollbacks under Trump’s second term.
Newsom’s proposal to revive the state’s rebate program signals California’s ongoing commitment to promoting clean energy and electric vehicles, even as federal policies shift under a new administration.
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