49 States Should Start Prepping Their Own $7,500 EV Tax Credits

California’s proposal to offer a state tax credit of up to $7,500 for electric vehicle (EV) purchases signals its commitment to advancing clean energy adoption and ensuring EV accessibility, particularly for middle- and lower-income consumers. This initiative is designed to mitigate the potential impact of federal policy changes, as the incoming administration may eliminate federal EV tax credits.

Under the proposed plan, the state tax credit could focus on vehicles priced below certain thresholds to prioritize affordability. Additionally, it might include requirements for significant domestic content to support local manufacturing and reduce production costs. Notably, Tesla’s EVs might not qualify for these state credits, as CA Governor Gavin Newsom’s office suggested the program could align with specific policy goals that exclude higher-priced models or manufacturers not meeting certain criteria, such as a market cap.

As Tesla enjoys a nearly 50% share of the US EV market, a market cap may exclude it from the new California credit. The plan would give EV makers such as GM a much-needed boost. GM’s US EV market share is not close yet to Tesla’s, although GM’s US EV market share grows significantly every quarter. EVinfo.net highly recommends all GM’s EVs, especially the low-priced and exciting Chevy Equinox pictured below.

GM and Ford’s EVs are at a disadvantage when it comes to Tesla. Tesla’s meteoric growth and Tesla CEO Elon Musk’s vast wealth came in part from the advantage created by Tesla’s non-unionized, lower-paid workforce. GM and Ford utilize union workers, who enjoy much higher salaries and greater benefits.

This proposal underscores California’s efforts to address equity concerns in clean energy transitions by ensuring that EV adoption benefits a broader segment of the population. By targeting affordability and accessibility, the state aims to drive greater adoption of EVs while supporting domestic production and reducing costs for consumers. The potential removal of federal tax credits adds urgency to California’s strategy, which could reshape the EV market and influence automakers to develop more cost-effective models.

The debate surrounding California’s proposed EV tax credit highlights the complexities of balancing climate goals with equity and economic policy. Tesla CEO Elon Musk has criticized the potential exclusion of Tesla vehicles from the new subsidies, calling the decision “insane” on X (formerly Twitter). Musk emphasized that Tesla is the only automaker producing its EVs entirely in California, contributing to the state’s economy. His remarks come amid reports suggesting that Tesla’s vehicles might not qualify under California’s proposed rules, which prioritize affordability and equitable access.

It is possible Musk may move his Tesla factory in Fremont, CA, out of the Golden State as a result of this. EVinfo.net is based in California, and we encourage him to go ahead and do so. California, as America’s leader in EV adoption and progressive policy, would rather rid itself of anything Musk is involved in, that makes him one penny of profit. Governor Newsom’s office reported that California is the 5th largest economy in the world for the seventh consecutive year, with a nominal GDP of nearly $3.9 trillion in 2023 and a growth rate of 6.1% since the year prior, according to the U.S. Bureau of Economic Analysis (BEA). On a per capita basis, California is the second largest economy in the world. Therefore, California will do just fine without any Musk-owned businesses.

California Governor Gavin Newsom introduced this proposal in response to concerns that the incoming federal administration under Donald Trump may eliminate federal EV tax credits. The plan seeks to replace the now-defunct Clean Vehicle Rebate Program (CVRP), which, before its end in 2023, allocated $1.49 billion to subsidize over 594,000 vehicles. The revamped initiative aims to ensure EV incentives focus on making electric vehicles more accessible to middle- and lower-income Californians, addressing disparities in clean energy adoption.

Advocates support the state’s approach, arguing that a market cap on subsidies could foster a more equitable distribution of funds and support newer or less profitable EV manufacturers struggling to scale production. They see this as a way to strengthen the overall EV industry rather than favoring dominant players. EVinfo.net supports the market cap approach, eliminating Tesla’s ability to capture the credit. Furthermore, we advocate that the credit should encourage lower-priced vehicles, which Tesla has repeatedly refused to produce.

The tension between Musk and state policymakers underscores the challenges of navigating shifting political landscapes while advancing aggressive climate initiatives. California’s efforts to align its EV strategy with broader equity goals reflect its commitment to leading the transition to clean energy, even as federal support wavers. At the same time, the state’s decisions must carefully consider the contributions of industry leaders like Tesla to ensure policies do not inadvertently hinder progress in the EV market.

EVinfo.net Encourages the Leaders of 49 States to Plan Their own EV Credits

Part of the incoming administration’s goal is to give more power to the states, reducing federal reach and spending. We agree federal spending should be reduced. Musk and Vivek Ramaswamy, leaders of the newly formed Department of Government Efficiency, known as DOGE, have released suggestions for cutting the federal budget. However, both men have extensive conflicts of interest, as well as absolutely no experience in managing federal economic spending. Therefore, we have zero confidence in their ability to make good recommendations.

For the leaders of the remaining 49 states, California sets a great example with its proposed EV tax credit. It’s time for the 49 remaining states to begin planning their own EV tax credits up to $7,500 for new EVs and up to $4,000 for used EVs.

Federal EV Tax Credit and EV Subsidies Receive Blowback

Many people in EVinfo.net’s LinkedIn network oppose the federal EV tax credit and EV subsidies. We understand that if a person doesn’t like EVs and never plans to buy or lease one, it’s only fair that they should have the power to vote against the federal EV tax credit and EV subsidies. This is the power of America’s democracy, and we respect the EV critics who advocate for removing the credits and subsides. They have a right to their own opinions, and to vote accordingly. Moving that vote to each state’s decision to create its own EV tax credit would allow these critics to more directly make their voices heard. Removing the federal EV tax credit and EV subsidies would be a disaster for our economy. We explain why below.

The Global Automotive Industry

If you follow the global automotive industry, you are no doubt well aware of the fact that China is very, very far ahead of America and the rest of the globe with EV production and adoption. If you are not aware, we encourage you to do some research on it. S&P Global reported China’s new energy vehicle sales (BEVs and hybrids) reached 1.29 million units in September, up 17% month over month and 42.3% year over year, hitting an all-time high and surpassing the record set in August. Additionally, the report shared that China’s EV production reached 1.31 million units in September, up 19.7% month over month and 48.8% year over year. Reuters reported half of all vehicles sold in China in July were either new pure electric vehicles (EV) or plug-in hybrids.

The reason keeping an eye on EV sales and production in China is important is because it is definitive proof that EVs are rapidly becoming the dominant force in the global automotive industry. China, the largest automotive market in the world, saw the sale of 26,062,824 passenger cars in 2023. From 2009 to 2023, the Chinese government invested a total of $230.8 billion to support the growth and development of its electric vehicle industry, making it the global leader, leaving America far behind.

The Federal EV Tax Credit and EV Subsidies Protect America’s Jobs and Economy

The federal EV tax credit and EV subsidies are important because they are crucial to helping American automakers catch up to China and compete with China, by producing EVs made in America. Removing the credit and subsidies would be a disaster for America’s economy, losing American jobs in significant numbers. The American automotive industry would shrink drastically, with automotive sales confined to its own borders (with the exception of Tesla). At EVinfo.net, we urge you to contact your government representatives and save the federal EV tax credit and EV subsidies, saving America’s automotive industry and jobs.