California Decision May Badly Dent Tesla Sales

By Douglas A. McIntyre Published Nov 26, 8:07AM EST

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California’s Governor, Gavin Newsom, says that the state will offer tax incentives for EV sales if the US government drops them. At this point, the industry believes President Trump will kill the federal government program. The state credits can be as high as $7,500, a significant reason for people to consider EVs over gas-powered cars. Newsome’s decision has one crucial exception: Tesla (NASDAQ: TSLA | TSLA Price Prediction) purchasers will not get the tax benefit. That is an important issue for America’s largest EV company in terms of market share. California is by far the largest EV market in the US.

California did have an EV tax credit program, but it ended in 2023. Newsome told Bloomberg that the arrangement would be resurrected, and he said the new one would include a provision for market share. He called these “market share limitations” when he talked to Bloomberg about the program.

The California Air Resources Board says the state has over 30% of all EVs sold in the US. This is not entirely because of California’s population, which is about 13%, the largest of any state in America. It may have to do with gas prices. In large cities in California, the price of a gallon of regular gas can be twice the national average.

California’s legislature needs to vote on the Newsom plan, which could change, so it is too early to say how it would affect Tesla’s US revenue. Tesla’s current US EV market share is 49%, and a drop in sales in California would dent that.

The decision would also hurt Tesla’s share price, which has increased 25% in the last month. After the news about Newsom’s proposal, it dropped 4%.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.