California and Tesla No Longer Best Friends?

NEW YORK (TheStreet) -- We generally think of California as Tesla's (TSLA) best friend. Most of Tesla's cars have been sold in California. Tesla is headquartered in California, which has been providing huge economic redistribution of dollars from other automakers into Tesla's coffers.

Tesla loves California. Tesla loves Jerry Brown. California loves Tesla. Jerry Brown loves Tesla.

Or so we thought. As it turns out, love is relative.

Somewhere along the line, something appears to have gone astray. No, I'm not talking about Tesla's well-documented sales decline in California over the last few quarters.

I'm not even talking about Tesla locating its battery factory joint-venture in Nevada, Arizona, New Mexico or Texas -- instead of California. That said, one wonders why California isn't the obvious location for this factory in order to minimize transport costs.

There are many potential reasons Tesla says its battery factory will not be in California. Geographic risk diversification is one. Proximity to natural resources (lithium) is another. Taxes are always a good reason. Perhaps California would even prohibit Tesla from making batteries in California, for environmental reasons? Wouldn't that be the ultimate irony?!

No, I'm talking about something else. I'm talking about California's shift to a giant legislative preference in favor of hydrogen fuel-cell cars.

You see, according to California's Air Resources Board, electric cars are good -- but not as good as hydrogen fuel cells. This is like the fight between the Bolsheviks and the Mensheviks, between Stalin and Trotsky: Who is the purest of them all?

For the last couple of years, the mighty force of political access tipped the Gladiator-style thumbs up/down scale in favor of battery-electric vehicles (BEVs), of which Tesla has the market's most impressive in terms of range and recharging time. As such, it's been getting the maximum de facto subsidy from the state of California.

Starting in the next few months, however, there is a new, even more pure environmental purist in town: Hydrogen fuel-cell cars are set to become California's new taxpayer subsidy darling.

If you liked this article you might like

The 12 Most Ridiculous Kitchen Appliances You Can Buy From Amazon

Tesla Shorts Beware; Traditional Media Makes a Comeback, -ICYMI

Tesla Is Dropping but Now Is One of the Worst Times to Be Short

Tesla to Discontinue Production of Cheaper Model S

Wall Street Deflates in Pullback After Fed Excitement, No Records for Dow