In a last-minute legislative push, Washington state lawmakers passed House Bill 2077, a controversial measure dubbed the “Tesla tax” that imposes new fees on electric vehicle (EV) credits, directly impacting Tesla’s operations. Reportedly approved over the weekend as part of a $77.8 billion state budget, the bill targets automakers’ EV credits—key to meeting the state’s zero-emissions vehicle (ZEV) goals by 2035—raising concerns about its effect on clean vehicle adoption.

How the Tesla Tax Works

HB 2077 introduces a 2% tax on EV credits sold to other automakers and a steeper 10% tax on credits banked for future use. These credits, issued since the 2023 model year, help automakers comply with Washington’s ZEV mandates, requiring 22% of 2025 vehicle sales to be EVs or plug-in hybrids, rising to 35% by 2026. The tax, effective for 2024 model years onward, exempts companies banking or selling fewer than 25,000 credits annually, making Tesla—Washington’s dominant EV player—the primary target. State projections estimate the tax will generate $78 million in the 2025–2027 biennium, with potential to double later.

Why It’s Controversial

The bill’s rapid introduction, just two weeks before passage, and its focus on Tesla have fueled accusations of political targeting, especially given Tesla CEO Elon Musk’s role in the Trump administration’s Department of Government Efficiency. Critics, including Tesla’s Jeff Gombosky, argue the tax “runs counter to the intent” of the ZEV credit program, potentially devaluing credits and slowing EV adoption. GeekWire reported that Rivian and the Natural Resources Defense Council also raised concerns, warning of setbacks to Washington’s clean vehicle goals. Supporters, including unions and House Majority Leader Joe Fitzgibbon, counter that the tax will fund EV infrastructure, with 30% of revenue (rising to 100% by July 2027) allocated to charging stations, creating jobs and boosting accessibility.

Implications for EV Owners and Industry

For Washington’s EV owners, the tax could indirectly raise costs if Tesla passes on expenses, potentially affecting affordability in a state where EV adoption is critical to meeting climate targets. The bill’s revenue—equivalent to $78 million USD—promises more charging stations, addressing range anxiety for drivers navigating the state’s 71,000 square miles. However, industry groups like the Alliance for Automotive Innovation warn that taxing credits could discourage automakers from prioritizing EVs, slowing the transition from gas-powered vehicles. With Gov. Bob Ferguson yet to decide on signing the bill, uncertainty looms over its final impact.

EVXL’s Take

At EVXL, we see this “Tesla tax” as a double-edged sword. On one hand, funding more chargers is a win for EV drivers tired of hunting for plugs on long trips across Washington’s highways. On the other, singling out Tesla risks chilling innovation from the company that’s driven EV adoption nationwide. It’s like taxing the fastest runner in a race to slow them down—fairness is debatable, and the finish line feels farther away. Washington’s bold climate goals deserve policies that lift all EVs, not ones that feel like a jab at one brand. Lawmakers should rethink this approach to keep the state’s clean vehicle dreams on track.