The Zhitong Finance APP learned that California Governor Gavin Newsom's office stated on Monday that if President Trump, if elected, cancels the federal tax credit for purchasing electric vehicles, Tesla (TSLA.US) electric cars may not qualify for California's new state tax credit proposal. Trump's transition team is considering eliminating the $7,500 federal tax credit for purchasing electric vehicles.

Tesla CEO Musk wrote on X: "Despite Tesla being the only company producing electric vehicles in California! This is crazy."

Musk has stated that he supports ending subsidies for electric vehicles, oil & gas.

Newsom stated on Monday that if Trump cancels the federal electric vehicle tax credit, he will propose creating a new version of the state clean vehicle rebate program, which will end in 2023 and cost $1.49 billion to subsidize over 594,000 vehicles.

"The governor's proposal on ZEV subsidies, as well as any potential market cap, needs to be negotiated with the legislature. Any potential market cap will aim to promote market competition, innovation, and support new market entrants," his office stated.

The state is facing financial resistance. Last week, a nonpartisan legislative agency estimated that California will face a $2 billion budget deficit next year.

As of September 30, electric vehicles account for 22% of auto sales in California, which is 0.293 million units. It is still unclear how much this plan will cost California, nor whether it includes the federal tax credit of $4,000 for used electric vehicles, along with similar restrictions on income and auto prices.

California offers up to $7,500 in subsidies for the purchase or lease of a new plug-in hybrid, battery, or fuel cell electric vehicle, which may be funded by the greenhouse gas reduction fund financed by polluters under the state's cap-and-trade program.

Musk and Newsom have clashed on state policies, such as closing Tesla's factory in Fremont during the pandemic, and California's approval of a bill concerning transgender children.

In 2021, Tesla moved its headquarters from California to Texas, and Musk stated this year that his other companies, such as SpaceX and the social media platform X, would follow suit.

California's zero-emission auto sales have surpassed the 2 million mark, doubling total sales since 2022.

Last month, a California official stated he expects the Environmental Protection Agency to approve the state's plan to stop selling pure gasoline cars by 2035, a proposal that has been questioned by major auto manufacturers.

California's regulations have been adopted by over a dozen other states, requiring that by 2035, 80% of all new cars sold in the state be electric vehicles, with plug-in hybrids not exceeding 20%.