For Electric Vehicle Makers, Winners and Losers in Climate Bill

The climate and energy package awaiting final approval by Congress aims to achieve two goals that are not always compatible: Make electric vehicles more affordable while freezing China out of the supply chain.

Auto industry representatives have been griping that the proposed $7,500 tax credits for electric vehicle buyers come with so many strings attached that few cars will qualify. Buyers can’t have very high incomes, the vehicles can’t cost too much, and the cars and their batteries have to meet made-in-America requirements that many carmakers cannot easily achieve.

“It’s going to be a lot harder for cars to qualify and for consumers to qualify for a federal tax credit for the purchase of an E.V.,” said John Bozzella, president of the Alliance for Automotive Innovation, which represents large U.S. and foreign automakers.

Some companies will benefit more than others from the sweeping legislation, known as the Inflation Reduction Act, which the House is expected to approve on Friday, after the Senate’s approval on Sunday.

The new credits favor companies, like Tesla and General Motors, that have been selling electric cars for years and have reorganized their supply chains to produce vehicles in the United States. A joint venture between G.M. and LG Energy Solution will soon open a battery plant in Ohio, part of a wave of electric vehicle investment by automakers and suppliers.

Vehicles sold by Tesla and G.M. will regain eligibility for incentives that the carmakers had lost because they had sold more than their quota of 200,000 electric cars under current law. The legislation eliminates that cap.

The legislation could be thornier for companies like Toyota and Stellantis, which owns Chrysler, Jeep and Ram, because they have not started making or selling large numbers of battery-powered vehicles in the United States.

The legislation effectively penalizes newer electric car companies, like Lucid and Rivian, whose vehicles may be too expensive to qualify for the credits. The incentives apply to sedans costing no more than $55,000 and pickups, vans or sport utility vehicles costing up to $80,000.

Lucid’s cheapest sedan starts at more than $80,000. Rivian’s electric pickups start at $72,500 but can easily top $80,000 with options. The company said it was exploring whether customers could lock in the incentives by making a binding purchase agreement before the new law took effect.

Even automakers that might lose access to tax credits could benefit from the law in other ways. The bill contains billions of dollars to help carmakers build factories and establish local supply chains. Dealers will profit from a provision granting $4,000 credits to used electric vehicles, with few strings attached.