California Governor Gavin Newson's office said on Monday that if President-elect Trump cancels the federal tax credit for electric vehicle purchases, Tesla (TSLA.US) electric vehicles may not meet California's new state tax credit proposal.
The Zhitong Finance App learned that California Governor Gavin Newson's office said on Monday that if President-elect Trump cancels the federal tax credit for the purchase of electric vehicles, Tesla (TSLA.US) electric vehicles may not meet California's new state tax credit proposal. Trump's transition team is considering removing the $7,500 federal tax credit for electric vehicle purchases.
Tesla CEO Musk wrote on X: “Although Tesla is the only company that makes electric cars in California! This is insane.”
Musk has said he supports ending subsidies for electric vehicles, oil and gas.
Newson said on Monday that if Trump cancels the federal electric vehicle tax credit, he will propose creating a new version of the state clean car tax rebate program, which will end in 2023 and cost $1.49 billion to subsidize more than 0.594 million cars.
“The Governor's proposal for ZEV subsidies, and any potential market limits, will need to be negotiated with the legislature. Any potential market capitalization will aim to promote market competition, innovation and support new market entrants,” his office said.
The state is facing financial resistance. Last week, a non-partisan legislature estimated that California would face a $2 billion budget deficit next year.
As of September 30, electric vehicles accounted for 22% of California car sales, or 0.293 million units. It's unclear how much California's plan will cost, and it's unclear whether it includes the federal government's $4,000 tax credit for used electric vehicles and the same restrictions on revenue and car prices.
California provides up to $7,500 in subsidies for the purchase or lease of a new plug-in hybrid, battery, or fuel cell electric vehicle. This amount may be paid by the greenhouse gas reduction fund, which is funded by polluters under the state's quota and trade plan.
Musk and Newson clashed over state policies, such as closing Tesla's Fremont factory during the pandemic and California approving a bill on transgender children.
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's zero-emission vehicle sales have surpassed the 2 million mark, and total sales have doubled since 2022.
Last month, a California official said he expected the Environmental Protection Agency to approve the state's plan to stop selling pure gasoline cars by 2035, a proposal that was questioned by major automakers.
California's regulations have been adopted by more than a dozen other states, requiring 80% of all new cars sold in the state to be electric cars and no more than 20% plug-in hybrids by 2035.