The California government is set to oppose Trump's plan to eliminate electric vehicle incentives, and Musk, a key figure in Trump's election victory, seems to be &#34;caught in the crossfire.&#34;
On Monday, November 25th, California Governor Gavin Newsom announced a plan that if Trump cancels federal subsidies after taking office next year, California will provide state subsidies to local electric vehicle buyers. A program that California gradually phased out in 2023 may be restarted to replace the $7,500 tax credit that Trump intends to eliminate, providing reductions for electric vehicle buyers.
The Governor's office told Bloomberg that the current proposal includes market share restrictions that would exclude Tesla's popular electric vehicle models. The details of the plan will also be discussed with the state legislature and may change in the future. The Governor's office stated that such restrictions are &#34;to create market conditions for more of these types of car manufacturers to take root.&#34;
On the day California announced the plan, Tesla's stock price fell in early trading on Monday, with losses widening towards the end of the day, hitting a daily low with a nearly 4.1% drop.
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The restrictions in California's plan mean that Tesla, which leads the U.S. market share, will be excluded from a key government incentive program. The aim of this program is to stimulate broader adoption of electric vehicles amid a slowdown in the growth of pure electric vehicles. Excluding Tesla may reflect the tense relationship between Newsom and Musk over the years.
Musk decided to move Tesla's headquarters to Texas in 2021, partly due to disappointment with California's politics. In July of this year, after Newsom signed a bill that no longer allowed school staff to inform parents of their children's sexual orientation, Musk announced that he would also move the headquarters of his other two companies, SpaceX and social media company X, from California to Texas.
Tesla still accounts for more than half of new electric vehicle sales in California, but its market dominance is weakening. Data from the California New Car Dealers Association shows that overall electric vehicle sales grew by 1% year-on-year in the first three quarters of this year, while Tesla's sales in California fell by 12.6% year-on-year. Tesla accounted for 54.5% of registered electric vehicles in California in the first three quarters, down from 63% in the same period last year.
More than a week ago, on November 15th, media reports indicated that Trump's transition team planned to eliminate the $7,500 tax credit available to consumers purchasing electric vehicles. This incentive is one of the core measures of President Biden's Inflation Reduction Act (IRA).
Wall Street Journal mentioned at the time that analysts believe Trump's plan to terminate electric vehicle subsidies could be a good thing for Tesla, as it would bring greater losses to its competitors.
Wedbush analyst Dan Ives stated, &#34;Trump's election as president is overall negative news for the electric vehicle industry; however, we believe this is a huge positive for Tesla.&#34;
The reason for the positive outlook is that Tesla has never been the biggest beneficiary of this subsidy. Compared to Tesla, which sells cars directly, this subsidy is more advantageous for other car manufacturers that enjoy tax benefits through &#34;leasing loopholes.&#34;
In the United States, most cars purchased directly by consumers do not qualify for the full subsidy because many of their parts or materials come from overseas. However, leased cars do not have these requirements, allowing consumers to benefit from the subsidy through leasing

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California plans to provide state subsidies to local electric vehicle buyers if Trump cancels federal government subsidies after taking office next year, but the subsidies will exclude Tesla's popular electric vehicle models to create market conditions for more automakers to establish a presence

- California Governor Gavin Newsom announced a plan to provide state subsidies for electric vehicle buyers if Trump cancels federal incentives after the election.  
- The proposal may exclude popular Tesla models to create market conditions for other manufacturers, reflecting the ongoing tension between Newsom and Elon Musk.  
- Tesla's market share in California is declining, with a 12.6% drop in sales this year, while overall electric vehicle sales have only grown by 1%.

Challenge Trump and Musk "getting caught in the crossfire"? California's electric vehicle subsidy plan excludes Tesla