Tesla Inc. TSLA CEO Elon Musk on Monday slammed California’s plans to shut the company’s electric vehicles out from consumer rebates under a new proposal, calling it an “insane” decision.
What Happened: According to a Bloomberg report, California Governor Gavin Newsom outlined a new proposal on Monday to offer incentives for EV buyers in California if President-elect Donald Trump gets rid of the current federal $7,500 tax break for EV buyers when he returns to the White House early next year.
Newsom's team reportedly told Bloomberg that the new proposal includes "market-share limitations" that would exclude Tesla's popular EV models from tax credit eligibility.
“It’s about creating the market conditions for more of these car makers to take route,” the governor's office reportedly said while adding that the details could change following negotiations with the state legislature.
Musk responded to the report on social media platform X and wrote, “Even though Tesla is the only company who manufactures their EVs in California! This is insane.” The CEO added that the move would hurt jobs in California.
U.S. representative from California’s 17th congressional district Ro Khanna also warned against the proposal in a social media post.
“Tesla makes over 550,000 vehicles in Fremont in my district & employs over 20,000. Let’s not play politics with keeping manufacturing in California. It would be foolish to exclude Tesla,” Khanna wrote while also recounting the time the Biden administration kept Tesla and Musk out of a 2021 EV summit, subsequently turning the billionaire towards Trump and the Republican Party.
Why It Matters: Tesla makes Model 3, Y, S, and X at the Fremont factory in California. The factory has a currently installed annual vehicle capacity of over 650,000 units.
Last month, Musk said that Tesla started manufacturing in California despite the higher cost because he lived in the state.
Tesla bought its Fremont Factory from Toyota Motor in 2010. It was previously owned by NUMMI, a joint venture between General Motors and Toyota which ended when GM entered bankruptcy in 2009.
Musk has long been critical of California. He moved Tesla’s headquarters from California to Austin a few years ago citing disagreements with state policies.
Price Action: Tesla stock fell nearly 4% on Monday to close at $338.59, according to Benzinga Pro data. Year-to-date, the Tesla stock is up 36.3%.
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