Model Y to lose all tax credit in California as state will compensate only non-Tesla EVs

The upcoming Trump administration plans to end the federal tax credit for new electric vehicles, and this may slow Tesla's sales, particularly in California.

Governor Newsom has advised that California will resurrect the state's rebate incentive on new EV purchases that it phased out last year, to compensate automakers for any premature end of the federal tax credit.

Originally, the Inflation Reduction Act that manages the government's EV tax credits was scheduled to run until 2032, but the new administration reportedly has other budget plans, leaving only some of its incentives that are directed towards nascent technologies like carbon capture instead of the relatively mature EV market.

Unfortunately, for future buyers of Tesla vehicles in California, especially those who'd be looking to grab the coveted Model Y Juniper facelift, will have to pay $7,500 more for it than for the current Model Y, and not because Tesla raises the price of its Juniper refresh.

Apparently, the compensatory state rebate will be disbursed based on market share in order to increase competition among EV makers. "It's about creating the market conditions for more of these car makers to take root," informed Governor Newsom.

This will automatically exclude Tesla vehicles from the state money earmarked to compensate for the end of the federal tax credit, as it has the highest market share among its peers.

While Tesla's EV market share in California slipped compared to last year, it still sells over half of the electric vehicles purchased in the state, so the abrupt end to all tax credits and rebates there could hurt its growth prospects.

Elon Musk already commented that Tesla is the only company that makes electric vehicles in California, so the move to exclude it from future state rebates would be illogical.

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