- California may revive its electric vehicle rebate program, Governor Gavin Newsom said on Monday. But Teslas could be excluded from the plan.
- The state has the highest adoption of EVs in the U.S. and also the nation's largest public fast-charging network.
- President-elect Donald Trump has threatened to repeal consumer incentives when he returns to the White House.
California has spearheaded the electric vehicle movement in the U.S. and it doesn't plan to slow down anytime soon. If President-elect Donald Trump repeals the consumer incentives in January, California may restart its EV rebate program, the state's Gov. Gavin Newsom proposed on Monday. But there's a twist: Tesla's EVs would reportedly be excluded from the revival of this rebate program.
EV buyers of all eligible brands nationwide can currently obtain up to $7,500 in federal tax credits, depending on their individual tax liabilities, making adoption easier on the wallet. That’s on top of local and state-level incentives encouraging buyers to go electric. But Trump has threatened to repeal the federal consumer incentives on "day one," falsely calling them a "mandate" and repeatedly attacking EVs on the campaign trail. He only recently warmed up to EVs after Tesla CEO Elon Musk donated about $200 million to his campaign effort. Musk and Trump both support ending the tax credits.
But now California's governor says the state won't budge. “Consumers continue to prove the skeptics wrong—zero-emission vehicles are here to stay," Newsom said in a statement. "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," he added. "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.”
Yet his office told Bloomberg today that Tesla will be excluded from this new proposal to allow rivals to catch up. The rebates would come from the state's Greenhouse Gas Reduction Fund, wherein industrial polluters can purchase emissions allowances, which the government then uses to support climate programs across industries, including transportation. “It’s about creating the market conditions for more of these car makers to take root,” the governor's office said in an email.
The state has sold over two million zero-emission vehicles so far. Its Clean Vehicle Rebate Program helped drive this adoption, but the program ended in Nov. 2023. Throughout its life, CRVP funded 594,000 vehicles, displaced 456 million gallons of gas and helped save nearly 4 million metric tonnes of carbon dioxide equivalent emissions, according to the California Air Resources Board. Transportation emissions are public health hazards directly linked to respiratory illnesses and lung diseases.
Newsom has proposed to create a new version of CRVP to continue driving EV adoption to tackle climate change. Yet exclusion from a potential rebate scheme would be a blow for Tesla sales in the region. It's one of Tesla's sales strongholds—and the birthplace of its success. However, Musk and Governor Newsom's relationship soured after Tesla moved its headquarters to Austin. Newsom has also clashed with Trump on emissions regulations.
That said, Trump cannot single-handedly repeal the federal EV incentives. They are enshrined under law as part of the Biden administration's landmark Inflation Reduction Act. Any pullback would require congressional approval. Governor Newsom cannot revive the state's tax credit program unilaterally either. He requires approval from the state legislature. The state's budget is among the country's largest, but it has witnessed growing deficits since the pandemic, as per the California Legislative Analyst's Office.
California also wants to ban gas car sales by 2035 but has yet to receive federal approval. As many as 17 other states have either already adopted California's emissions standards or are finalizing similar regulations. However, Trump has threatened to strip California of its ability to set its own emissions standards, but he will likely face opposition. When he tried to do the same during his last term, the state sued his administration 120 times.
Contact the author: suvrat.kothari@insideevs.com
