Topline
California’s plan to offer electric car tax credits if President-elect Donald Trump cuts off federal incentives has a catch: It may not include rebates for customers of Tesla, the most popular EV brand, eliciting a strongly worded response from the company’s Trump-friendly CEO Elon Musk.
Tesla CEO Elon Musk, left, looks on as an excited customer celebrates scoring a Tesla Model X in … [+]
Key Facts
The office of California Gov. Gavin Newsom announced Monday it intends to restart the state’s initiative offering up to $7,500 in tax credits for EV buyers should Trump ax the identically sized federal credit when he takes office, which Reuters reports Trump’s transition team plans to do.
But the state’s potential new program could exclude buyers of Tesla vehicles by only offering the incentives for carmakers with smaller market shares, reported Bloomberg and The New York Times, cutting out the company which accounted for 56% of new EV sales in California during the third quarter.
A spokesperson for Newsom’s office would not confirm to Forbes if Tesla would be carved out from the possibly reignited credit initiative, but indicated it was a possibility Tesla would be omitted, citing the potential to support smaller EV makers.
What Does Trump’s Ev Credit Saga Mean For Tesla?
Much has been made in recent months about Trump’s potential repeal of the federal EV tax credit and the potential drag it would be on sales for Tesla, considering the rebates dangle a hefty effective discount to prospective car buyers. Though Wall Street analysts have largely agreed the end of the federal program would hurt other EV makers more than they would Tesla given the Musk-led company’s dominant market share, the potential for new roadblocks in the crucial California market may provide a new challenge for the company. “If credits go away, further pricing actions may be needed,” UBS analyst Joseph Spak wrote in a Monday note to clients, teasing the potential for more price cuts from Tesla, which would eat into the firm’s wobbling profit margins.
Big Number
35%. That’s the percentage of all U.S.-registered electric-only vehicles from California, according to the Department of Energy. California’s 1.26 million EVs are nearly five times greater than the amount registered in the next closest state, Florida.
News Peg
Shares of Tesla declined 4% in Monday trading but remain up more than 30% since Election Day, a surge tied to investors’ optimism regarding Musk’s close relationship with Trump would help create more favorable oversight of the automaker. “The rise in Tesla stock is mostly driven by animal spirits” rather than fundamental changes to its business outlook, according to Spak, who has a sell rating for the stock. It’s unclear whether Monday’s decline for Tesla was tied to the California EV credit news, though its share price was down more than 6% from its morning peak by market close.
Key Background
Musk has feuded with the state of California and Newsom for years, moving Tesla’s corporate headquarters from Silicon Valley to Texas in 2021, coinciding with the start of his shift toward right-wing politics. The richest person ever calculated by Forbes, Musk donated more than $100 million toward Trump’s election efforts and is Trump’s self-described “first buddy,” advising the president-elect on various policy issues.
Forbes Valuation
We estimate Musk’s net worth at $330.7 billion, making him the wealthiest person on Earth by a wide margin.
