In a crazy new plan from California’s Governor Newsom, he is planning to offer electric vehicle tax credits to its residents as President Trump is planning to remove the mandate and the tax credit. The new rule would offer the 7,500 dollar tax credit to all electric cars except Tesla. Which is crazy because they are the only US car company building electric cars in the state.

It appears as though Newsom is angling for a prospective Democratic presidential move for 2028 as a hopeful against Republican ally and power player, Elon Musk. Musk can’t run for president but does support removing the mandate and the tax credit as well as supporting President Donald Trump.

Newsom unveiled plans to offer rebates to EV buyers if President-elect Trump repeals a federal subsidy. A program California phased out in 2023 could be rebooted in lieu of the $7,500 tax credit, the governor said. This is just one-upmanship.

Newsom’s office told Bloomberg News that the current proposal includes market-share limitations that would exclude Tesla’s popular EV models. The details, including Tesla’s omission from the credits, will be negotiated with the state legislature and could change. But it seems obvious that the plan is targeted to hurt Tesla.

Musk, Tesla’s multi-billionaire CEO, posted on X that the proposal was QUOTE “insane,” citing the automaker’s manufacturing presence in the state.

The move would leave market-leading Tesla out of a key incentive program aimed at spurring wider adoption of EVs at a time of slowing growth for all-electric vehicles. Tesla’s models do qualify for the current federal credit, which was introduced as part of President Joe Biden’s signature climate bill, the Inflation Reduction Act.

Excluding Tesla could bolster Newsom’s standing on the left as he renews a clash with Musk, who has become a member of Trump’s inner circle and accepted a role helping the incoming administration cut government spending. Musk has said he’s fine with federal subsidies going away.

Tensions between Musk and Newsom have been strained for years, since Tesla’s leader moving the automaker’s headquarters to Texas in 2021, in part citing frustration with California’s politics.

Musk had angrily denounced state orders to close Tesla’s Fremont, California factory during the Covid-19 pandemic, labeling them QUOTE “fascist” in an earnings call. When Musk announced the headquarters move, Newsom said Tesla owed some of its success to California.

Teslas still accounts for more than half of all new EVs sold in California, but its grip on the market is slipping. Tesla’s sales in California fell 12.6 percent during the first three quarters compared with a year earlier, even as overall electric-vehicle sales in the state rose 1 percent, according to the California New Car Dealers Association. Tesla made 54.5 percent of all EVs registered in the state during the first three quarters, a significant drop from 63 percent during the same period last year.

When the new tax credit plan is finalized, we’ll have the updates for you right here.

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