The climate bill President Biden signed into law yesterday will open up tens of billions of dollars in subsidies for high-tech electric vehicle plants across the South and the Midwest.

Why it matters: The package is a big down payment on addressing climate change and moving toward energy independence as the U.S. races to build a domestic supply chain for batteries and other critical materials.

Driving the news: The auto industry has already poured billions into new EV and battery manufacturing facilities across North America over the last couple years.

For example: The government will provide a tax credit of $35 per kilowatt hour (kWh) for each U.S.-produced battery cell.

There's also a tax credit for U.S.-produced battery modules — groups of cells bundled together that fit inside a battery pack.

Critical materials and minerals produced in the U.S. also get a 10% tax credit under the new law.

There's also $2 billion in grants to retool existing auto plants to make clean vehicles, and up to $20 billion more in loans to build new factories.

The intrigue: And yet automakers aren't happy about the law, largely because its strict supply chain requirements mean far fewer electric vehicles will qualify for big consumer tax credits right off the bat.

Yes, but: Over time, reshoring battery production should drive down the cost of EVs — and lessen U.S. dependence on China.

Between the lines: In essence, the U.S. has shifted the incentives for EV adoption from consumers to manufacturers — instead of making electrics cheaper for car buyers, the new law rewards carmakers for building EVs with U.S.-made batteries.

The bottom line: Automakers' scramble to meet domestic content requirements will lead to a rapid build-out of manufacturing capacity for electric vehicles, batteries, and the components and materials required to produce them.