California will bring back electric car subsidies if Trump cancels tax credits. But not for Tesla

California Governor Gavin Newsom has promised to renew the Clean Vehicle Rebate subsidy programme if US President-elect Donald Trump decides to eliminate the federal tax credit for electric cars. However, Tesla, the largest player in the state's electric car market, will not fall under the new subsidies. This decision has already drawn criticism from Ilon Musk.

Here's What We Know

The Clean Vehicle Rebate programme ran until 2023 and funded more than 594,000 vehicles. Grants reached $7,500 for the purchase of ZEVs (zero emission vehicles) and included more than 66,000 rebates for low-income people, totalling more than $354 million. Battery electric vehicles (71%) and plug-in hybrids (26%) received the majority of funds. Another 3% went to hydrogen fuel cell electric vehicles (FCEVs) and electric motorbikes.

Newsom assured that the new programme will stimulate "innovation and competition" in electric cars. It is expected to be funded by the Greenhouse Gas Reduction Fund, but details are still being debated in the state parliament.

The most surprising aspect of this story is Tesla's exclusion from the support programme. The governor's office attributed it to market restrictions that should give other manufacturers a chance to gain a foothold in the market. Musk responded by calling the idea "crazy", emphasising that Tesla is the only electric car manufacturer in California.

Trump's plans

According to Bloomberg, Donald Trump has yet to make a final decision on cancelling the $7,500 federal loan. During the election campaign in August, he said he supports electric cars but is also keen on petrol cars, hybrids and "something new". Musk, for his part, supports cancelling the credit, saying it would hurt his competitors more than Tesla.

Meanwhile, California remains the US leader in ZEV sales, with 115,897 units sold in the third quarter of 2024, accounting for 26.4 per cent of new vehicles.

Source: Bloomberg