California Governor Gavin Newsom is facing criticism for a new electric vehicle rebate proposal that excludes Tesla, the state’s top EV manufacturer.
Tesla CEO Elon Musk called the plan “insane” on social media, questioning why California would sideline the only EV maker producing vehicles locally.
Newsom’s proposal, aimed at reviving the expired Clean Vehicle Rebate Program, would offer incentives for EVs but exclude Tesla to promote competition, the New York Post reported.
Critics, including Musk, argue the move is politically motivated, especially as Musk’s relationship with President-elect Donald Trump has grown. Under the previous rebate program, 42% of credits went to Tesla buyers.
The plan coincides with Trump’s softened stance on federal EV tax credits, worth up to $7,500, after initially pledging to eliminate them. Newsom has called a special session of the legislature to bolster state laws against potential federal rollbacks under Trump’s administration.
Supporters of Newsom’s plan say it will foster market innovation by giving smaller EV makers a chance to compete. However, analysts warn that the exclusion could backfire, pushing Musk to move more Tesla operations from California to Texas, where Tesla’s headquarters had already relocated in 2021.
Musk has long been critical of California’s regulatory environment, having clashed with state officials over COVID-19 restrictions. Some speculate this latest dispute could deepen Tesla’s shift away from California, risking thousands of jobs.
Newsom defended the plan as a step toward affordability and sustainability, stating, “Zero-emission vehicles are here to stay.” However, the debate underscores a growing rift between California’s progressive policies and those of one of its most prominent innovators.