Elon Musk fired back at California Governor Gavin Newsom who said the state might exclude Tesla from a new EV incentive meant to replace the federal one Musk is trying to kill.
The knives are out.
As we previously reported, Trump’s transition team has already been strategizing about how to repeal the Inlfation Reduction Act and more specifically, the updated federal tax credit for electric vehicles.
Elon Musk is supporting the move even though he admitted that it would hurt EV sales in the US, including Tesla’s, but he believes long term it would help Tesla, which has a more competitive cost structure than other EV manufacturers who could fail without the credits – much like Tesla could have failed with them just a few years ago.
Recently, we even learn that Tesla, which lobbied to get the new federal tax credit, is also now lobbying for Trump to remove it.
Yesterday, we reported that California announced that if the federal tax credit does go away under Trump next year, it will step in with its own extra credit to compensate for it.
Governor Gavin Newsom has since elaborated on the proposal to add a market-share limitation criteria for EVs that would exclude Tesla, which has the most EV market shares in the market. The goal is reportedly to “create the market conditions for more of these car makers to take root.”
Tesla CEO Elon Musk called the proposal “insane”:
Tesla is the only one making cars in California, so this move hurts jobs in California.
Tesla employs many people in California, especially at its Fremont factory in the Bay Area, but it also employs engineering and design teams in both southern and northern California.
It sounds like Musk, who is lobbying to remove the federal tax credit, believe that Tesla might have to cut jobs in California if this plan is executed.
Electrek’s Take
As you know if you have been following my commentary on Musk using and not using his influence on Trump to advance EVs in the US, I am really disappointed in him pushing to kill the federal tax credit.
It will undoubtedly slow down EV adoption in the US, which is already lagging behind the rest of the world, and it feels like Tesla is pulling the very useful ladder it itself used just as it doesn’t need it as much and other EV companies greatly need it.
That said, I’m not sure I agree with Newsom’s approach here. Before the Tesla exclusion was discussed, I actually tweeted this:
Since the goal is to replace the federal tax credit, I think it makes sense that California would exclude anyone company who is lobying against it, like Tesla, rather than just because of market shares. They are asking for it, after all.
I think it’s a better reason to exclude them than just: you guys already have too high market shares.
You want to slow EV adoption to gain a competitive advantage, then that’s what you get. Musk couldn’t complain about that without being a hypocrite – though that doesn’t seem to be a big concern for him these days.