By Summary
- Tesla moved its headquarters from California to Texas.
- Musk notes on X that Tesla makes EVs in California.
- Tesla shares ended the trading session down by 4%.
Tesla’s EVs May Lose Eligibility for California Tax Credits Amid Proposed Federal Changes
Tesla’s electric vehicles likely would not qualify for California’s new state tax credits under a proposal in the works if President-elect Donald Trump scraps the federal tax credit for EV purchases, Governor Gavin Newsom’s office said on Monday.
Tesla shares fell 4% to $338.59 during trading and dropped another 1.2% in after-hours trading. Trump’s transition team is reportedly considering removing the $7,500 federal tax credit for EV purchases. Tesla CEO Elon Musk, a close Trump adviser, sharply criticized the idea of barring the automaker from EV subsidies writing on X in response “Even though Tesla is the only company who manufactures their EVs in California! This is insane.” While Musk supports ending subsidies for all industries, including oil and gas, he opposes selective exclusions.
California accounted for 39% of all EV registrations in 2021.
Governor Newsom said on Monday that if Trump eliminates a federal EV tax credit, he will propose creating a new version of the state’s Clean Vehicle Rebate Program that ended in 2023 and spent $1.49 billion to subsidize more than 594,000 vehicles. “The governor’s proposal for ZEV rebates, and any potential market cap, is subject to negotiation with the legislature. Any potential market cap would be intended to foster market competition, innovation and to support new market entrants,” his office said. The state faces financial headwinds. California faces a $2 billion budget deficit next year, a non-partisan legislative estimate said last week.
California’s EVs sales account for 22% of the state’s vehicle market (293,000 units through September 30), and it is unclear how much the state program would cost and if it would include the federal $4,000 tax credit for used EVs and impose the same limits on income and vehicle price. California provided up to $7,500 for the purchase or lease of a new plug-in hybrid, battery or fuel cell EV and could potentially be paid for by the Greenhouse Gas Reduction Fund which is funded by polluters under the state’s cap-and-trade program.
California Gov. Gavin Newsom answers a reporters question about his revised 2024-25 state budget during a news conference in Sacramento, California, Friday, May 10, 2024. On Saturday, June 22, Newsom and legislative leaders announced an agreement to close an estimated $46.8 billion budget deficit.
Musk and Newsom have clashed over state policies such as shutting Tesla’s Fremont factory during the pandemic and California’s approval of a bill on transgender kids. In 2021, Tesla moved its headquarters from California to Texas, and Musk said this year that his other companies such as SpaceX and social media platform X will follow suit.
California has crossed the 2 million marks for sales of zero-emission vehicle (ZEV), doubling total sales since 2022. Last month, a California official said he expects the Environmental Protection Agency to approve the state’s plan to halt the sale of gasoline-only vehicles by 2035, a proposal that major automakers have met with skepticism. California’s rules, which have been adopted by a dozen other states, require 80% of all new vehicles sold in the state be electric by 2035 and no more than 20% plug-in hybrid electric.
Elon Musk discusses his new project digging tunnels under LA, the latest from Tesla and SpaceX and his motivation for building a future on Mars in conversation with TED’s Head Curator, Chris Anderson.
