No rebate for you! California’s Newsom excludes Tesla from ZEV credit

California’s governor has proposed a controversial measure that will provide incentives to zero-emission vehicles if President-elect Trump repeals the current $7,500 federal tax credit. The only problem…it excludes the most popular EV on the road and one that makes up more than half of EVs registered in the state.

Governor Gavin Newsom said he would reinstate the Clean Vehicle Rebate Program which was phased out in 2023 to offer rebates on EVs but would exclude all Tesla (NASDAQ:TSLA) EVs in an effort to create “the market conditions for more of these carmakers to take root,” Newsom’s office said in a statement.

While Newsom’s public statements suggest a genuine interest in fostering competition in the ZEV industry, the acrimony between Tesla (TSLA) CEO Elon Musk and California has been simmering for years. In the aftermath of severe COVID lockdowns and after the billionaire publicly called California’s parental notification law “the last straw,” Musk-owned X and SpaceX uprooted their headquarters from California and moved to Texas.

Newsom’s proposal comes as President-elect Trump is expected to repeal the $7,500 Clean Vehicle Tax Credit, which was created under the Inflation Reduction Act of 2022. To qualify, the vehicle must be a new plug-in electric or fuel cell vehicle and must undergo final assembly in North America. And while most Tesla (TSLA) models qualify for the credit, a repeal is likely to have less impact on its vehicle sales than competitors.

That didn’t stop Musk from calling Newsom’s exclusion of Tesla “insane.”

“Tesla is the only company who manufactures their EVs in California!” Musk said on his social media platform, X.

Despite Newsom’s support for such a program, the terms of an EV rebate are still under consideration and subject to state government approval.