The U.S. State Department was expected to award Elon Musk's Tesla a 0 million contract for armored vehicles, but the word "Tesla" was removed from the procurement document.

Karah Rucker Anchor/Reporter

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Gavin Newsom’s EV tax break would exclude Tesla, Musk responds

Nov 26, 2024

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Karah Rucker Anchor/Reporter

By Karah Rucker (Anchor/Reporter), Ian Kennedy (Lead Video Editor), Ian Kennedy (Video Editor)

Gov. Gavin Newsom is preparing to offer California residents a $7,500 tax incentive for purchasing an electric vehicle if the Trump administration eliminates the federal tax credit. However, there’s a significant difference between the two programs.

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Under Newsom’s proposed incentive, Tesla buyers in California would not qualify for the $7,500 tax break. That decision could potentially direct business away from Tesla to competitors.

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The exclusion of Tesla from the rebate program is due to a proposed market-share cap aimed at promoting competition within the EV market. Tesla currently accounts for more than half of all new electric vehicles sold in California.

The governor’s office confirmed to Bloomberg that the terms of the tax incentive could change. It said the current proposal includes “market-share limitations” that would exclude Tesla’s popular models. The office also told Reuters that the rebate would “foster market competition” and “support new market entrants.”

Tesla CEO Elon Musk responded to the news on X, writing, “Even though Tesla is the only company who manufactures their EVs in California! This is insane.”

Trump’s transition team has shown interest in eliminating the federal EV tax credit. It would be part of a broader tax-reform package that Congress would vote on, according to Reuters, which spoke with two people familiar with the discussions.

California’s EV incentive program is not new. The state had its own version before the Biden administration enacted the federal tax credit. Newsom’s proposal to revive the state’s EV tax incentive would only progress if the Trump administration ended the federal subsidy.

Tags: Electric vehicles, Elon Musk, EV tax credit, Gavin Newsom

[Karah Rucker]

GOVERNOR GAVIN NEWSOM IS PREPARING TO OFFER CALIFORNIA RESIDENTS A 75 HUNDRED DOLLAR TAX BREAK FOR PURCHASING AN ELECTRIC VEHICLE IF THE TRUMP ADMINISTRATION ROLLS BACK THE FEDERAL TAX CREDIT.

BUT THERE’S A MAJOR DIFFERENCE BETWEEN THE TWO.

UNDER THE GOVERNOR’S EV INCENTIVE –

IF YOU BUY A TESLA IN CALIFORNIA – YOU WON’T RECEIVE THE 75 HUNDRED DOLLAR TAX BREAK –

POTENTIALLY DRIVING BUSINESS FROM ELON MUSK’S EV COMPANY TO COMPETITORS.

WHY THE STATE WON’T OFFER THE TAX BREAK TO TESLA OWNERS –

HAS TO DO WITH THE STATE LIMITING THE NUMBER OF REBATES TO COMPANIES WITH A LARGE MARKET SHARE IN ORDER TO BOOST EV COMPETITION.

AND TESLA CURRENTLY ACCOUNTS FOR MORE THAN HALF OF ALL NEW EVS SOLD IN CALIFORNIA.

THE GOVERNOR’S OFFICE TOLD BLOOMBERG THE TERMS OF THE TAX INCENTIVE COULD CHANGE –

BUT SAYS ITS CURRENT PROPOSAL INCLUDES “MARKET-SHARE LIMITATIONS” THAT WOULD EXCLUDE TESLA’S POPULAR EV MODELS.

THE GOVERNOR’S OFFICE ALSO TOLD REUTERS THE EV REBATE WOULD BE INTENDED TO “FOSTER MARKET COMPETITION” AND “SUPPORT NEW MARKET ENTRANTS.”

ELON MUSK RESPONDED TO THE NEWS OF TESLA BEING LEFT OFF THE LIST OF QUALIFYING EVS FOR TAX BREAKS.

SAYING ON X –

“EVEN THOUGH TESLA IS THE ONLY COMPANY WHO MANUFACTURES THEIR EVS IN CALIFORNIA! THIS IS INSANE.”

TRUMP’S TRANSITION TEAM HAS EXPRESSED INTEREST IN NIXING THE FEDERAL EV TAX CREDIT AS PART OF A TAX-REFORM PACKAGE THAT CONGRESS WOULD VOTE ON –

ACCORDING TO REUTERS WHO SPOKE WITH TWO PEOPLE FAMILIAR WITH THE TALKS.

CALIFORNIA’S EV INCENTIVE IS NOTHING NEW.

THEY HAD THEIR OWN PRIOR TO THE BIDEN ADMINISTRATION ENACTING A FEDERAL TAX CREDIT.

SO NEWSOM’S TALKS OF REVIVING THE **STATE’S EV TAX INCENTIVE WOULD TAKE SHAPE ONLY IF TRUMP’S TEAM DOES END THE FEDERAL SUBSIDY.

HOWEVER – CALIFORNIA’S OWN FISCAL CHALLENGES COULD PREVENT NEWSOM FROM RE-IMPLEMENTING THE TAX CREDIT.

OUR ENERGY CORRESPONDENT JACK AYLMER HAS MORE ON WHAT WOULD NEED TO HAPPEN IN ORDER FOR CALIFORNIA TO START UP ITS EV INCENTIVE AGAIN.

YOU CAN FIND THAT STORY BY DOWNLOADING THE STRAIGHT ARROW NEWS APP OR VISITING SAN DOT COM.

Gavin Newsom’s EV tax break would exclude Tesla, Musk responds

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