The California legislature scrapped a $3 billion spending bill aimed at boosting tax subsidies for electric vehicles that could have been a boon to Tesla.
The late Friday move came after criticism that the bill was short on details and failed to demonstrate exactly where the money would come from to pay for it.
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The state Finance Department had opposed a previous version of the bill because it appropriated billions of dollars "without identifying a funding source."
The bill's original language called for funds to come from additional taxes on utilities, but that language was stripped out earlier in the legislative process.
Conservative lawmakers labeled the measure the "Tesla bailout" bill because it would provide greater subsidies for those buying full electronic vehicles such as Tesla and lower rebates for hydrogen and hybrid car purchases.
Additionally, the bill would have come at a critical time for Tesla, just as the company was about to hit its 200,000 limit for federal subsidies. Tesla owner Elon Musk's net worth is now estimated to exceed $20 billion and his businesses have received roughly $5 billion in federal and state tax breaks, even as their balance sheets have remained in the red.
The state's Senate removed the measure's $3 billion price tag late last Friday but provided no dollar amount to replace it. The action essentially transforms the measure into a study.
Instead of providing money for the electric vehicle rebate, it would direct the California Air Resources Board to research the best ways to provide EV rebate legislation with a deadline of Jan. 1, 2019.
The original version of the bill would have provided $3 billion in rebates until 2030, nearly six times more than the roughly $500 million California has spent on EV subsidies so far.
The measure now requires the state's Air Resources Board to determine the funding levels "necessary" for the zero-emissions vehicle incentive program to support the goal of reducing greenhouse gas emissions to 40 percent below 1990 levels by 2030.
The bill now moves to the full legislature for consideration.
When first introducing the measure earlier this year, Assemblyman Phil Ting of San Francisco, the main author of the bill, said that expanding the EV subsidy program would jump-start California Gov. Jerry Brown's goal of putting 1.5 million electric vehicles on the roads by 2025 and 4 million by 2030.
Ting did not respond to a Washington Free Beacon request for comment on the Senate's decision to drastically alter the bill.