Tesla CEO Elon Musk launched a scathing attack on California’s proposed electric vehicle (EV) incentive program on Monday, calling the decision “insane” after the state announced plans to exclude Tesla from receiving consumer rebates under the new program. Musk’s criticism centers on the significant economic implications for both Tesla and the broader California economy.
The controversy revolves around a proposal from California Governor Gavin Newsom, which includes market-share limitations that would prevent Tesla’s popular EV models from qualifying for state rebates. According to a Bloomberg report, the proposal is designed to offer incentives to EV buyers, potentially in response to the expected repeal of the federal $7,500 EV tax credit under a future Trump administration. However, the plan’s market-share limitations specifically target Tesla, despite the company’s dominance in the California EV market.
Newsom’s office justified the proposal by stating that the goal is to create a more diverse EV market and encourage participation from a broader range of manufacturers. The state argues that the market-share limitations are meant to level the playing field for other automakers. However, this reasoning has been met with criticism, as Tesla is currently the only company manufacturing EVs in California, producing more than 550,000 vehicles annually at its Fremont factory and employing over 20,000 people.
Musk’s response on X (formerly Twitter) was blunt. He emphasized Tesla’s role as the sole Californian EV manufacturer, calling out the proposal’s potential to hurt jobs in the state. Tesla’s Fremont factory has been a cornerstone of the company’s operations, and Musk made it clear that excluding Tesla from state incentives would have far-reaching consequences for California’s economy.
Further complicating the situation, California Congressman Ro Khanna (D-CA), whose district includes Tesla’s Fremont factory, also voiced strong opposition to the proposal. Khanna stressed that such a decision could have political consequences and warned against undermining established California manufacturing jobs. He also pointed to Tesla’s exclusion from a 2021 EV summit hosted by the Biden administration as a possible catalyst for Musk’s recent shift toward the Republican Party.
Tesla’s Fremont factory, which was acquired from Toyota in 2010, currently has an annual production capacity of over 650,000 vehicles. Musk has previously stated that, despite higher operational costs, Tesla chose to keep its California manufacturing operations due to his personal ties to the state. This makes the proposed exclusion even more significant, as it threatens the future of both Tesla and California’s auto manufacturing industry.
The proposal is still in the negotiation phase with the state legislature, meaning changes could be made before any final decision is reached. However, the strong opposition from Musk and prominent California politicians suggests that this issue is far from settled. The news of the proposal caused Tesla’s stock price to fall by nearly 4% on Monday, closing at $338.59, though the stock is still up by 36.3% year-to-date.
