Gavin Newsom’s ‘insane’ plan to pull plug on Tesla in California

Gavin Newsom is one sore loser.

Now that President-elect Donald Trump is planning to remove the electric car “mandate” and end the $7,500 tax credit for EV buyers, the California governor has plans to offer his own version of the credit.

The move would leave market-leading Tesla out of a key incentive program aimed at spurring wider adoption of EVs at a time of slowing growth for all-electric vehicles.

Buy an EV in California and get your money — unless you’re buying a Tesla.

Penalize the only U.S. car company building electric cars in California? Makes perfect sense — if you’re one of those people who dress like Spider-Man and hang out on Hollywood Boulevard.

Well, I suppose there is some method to Newsom’s madness. He could be eyeing a presidential run in 2028. And what better way to attack Trump than to go after his high-profile supporter, Elon Musk?

In other words, Newsom’s plan to reboot a rebate program phased out in 2023 isn’t about Californians or the environment or the car industry. This is one-upmanship, pure and simple.

Newsom’s office told Bloomberg News that the current proposal includes market-share limitations that would exclude Tesla’s popular EV models. The details, including Tesla’s omission from the credits, will be negotiated with the state legislature and could change. But it seems obvious that the plan is targeted to hurt Tesla.

Musk, Tesla’s multi-billionaire CEO, posted on X that the proposal was “insane,” citing the automaker’s manufacturing presence in the state.

The move would leave market-leading Tesla out of a key incentive program aimed at spurring wider adoption of EVs at a time of slowing growth for all-electric vehicles. Tesla’s models do qualify for the current federal credit, which was introduced as part of President Joe Biden’s signature climate bill, the Inflation Reduction Act.

Excluding Tesla could bolster Newsom’s standing on the left as he renews a clash with Musk, who has become a member of Trump’s inner circle and accepted a role helping the incoming administration cut government spending. Musk has said he’s fine with federal subsidies going away.

Tensions between Musk and Newsom have been strained for years, since Tesla’s leader moving the automaker’s headquarters to Texas in 2021, in part citing frustration with California’s politics.

Musk had angrily denounced state orders to close Tesla’s Fremont, California, factory during the COVID-19 pandemic, labeling them “fascist” in an earnings call. When Musk announced the headquarters move, Newsom said Tesla owed some of its success to California.

Tesla still accounts for more than half of all new EVs sold in California, but its grip on the market is slipping.

The company’s sales in California fell 12.6% during the first three quarters compared with a year earlier, even as overall EV sales in the state rose 1%, according to the California New Car Dealers Association. Tesla made 54.5% of all EVs registered in the state during the first three quarters, a significant drop from 63% during the same period last year.

When the new tax credit plan is finalized, we’ll have the updates for you right here.