Tesla’s Electric Vehicles May Not Qualify for California State Tax Credits if Federal Credit is Axed
Tesla’s electric vehicles may not be eligible for California’s state tax credits if President-elect Donald Trump eliminates the federal tax credit for electric vehicle purchases. According to Governor Gavin Newsom’s office, the state is considering creating a new version of its Clean Vehicle Rebate Program to offset the potential loss of federal incentives.
If the federal tax credit is scrapped, Newsom’s office plans to propose a new program that would provide rebates for new plug-in hybrid, battery, or fuel cell electric vehicles. The state’s Greenhouse Gas Reduction Fund, which is funded by polluters under the state’s cap-and-trade program, could pay for the rebates.
Tesla CEO Elon Musk has criticized the idea of eliminating the federal tax credit for electric vehicles, tweeting that it would be “insane” for a company that manufactures EVs in California not to qualify for the incentives. However, Trump’s transition team is considering eliminating the $7,500 federal tax credit for electric vehicle purchases.
Musk has previously expressed support for ending subsidies for oil, gas, and electric vehicles, but his company relies heavily on the current federal tax credit to be competitive in the market. California’s proposal aims to foster market competition, innovation, and support new market entrants, and would include income and vehicle price limits to ensure the program is fair and effective.
The state is facing a $2 billion budget deficit next year, and it’s unclear how the new program would affect the financial situation. California has a strong track record of supporting electric vehicles, with over 22% of sales being electric, and is considering a plan to halt the sale of gasoline-only vehicles by 2035.
