California is rolling out new incentives for first-time electric vehicle buyers, and the rules have a clear home-state advantage. The program, which passed with $135 million in funding, aims to lure new EV owners into the fold—but it's structured in a way that gives a leg up to Rivian Automotive (RIVN) and Lucid Group (LCID), while leaving Tesla Inc. (TSLA) on the sidelines.

With the federal $7,500 EV tax credit now expired, California is stepping in to keep the momentum going. The new law, signed by Governor Gavin Newsom, offers incentives without requiring an application—a streamlined approach to get more EVs on the road. But the details matter.

Here's the deal: the incentive applies to new EVs priced under $50,000 or used EVs under $25,000. That price cap cuts out a lot of the market, but there's a twist. If the automaker is based in California, the price cap is waived entirely. That means Rivian, headquartered in Irvine, and Lucid, based in the Bay Area, can offer their pricier models with the incentive attached. Rivian's R2 starts around $45,000, but many versions top $50,000. Lucid's Air and Gravity start at $70,990 and $79,990, respectively—well above the cap, but now eligible thanks to their California roots.

Tesla, meanwhile, is left out of the waiver. The company still manufactures cars in Fremont, California, but moved its headquarters to Texas in 2021. That relocation, combined with the very public feud between CEO Elon Musk and Governor Newsom, likely explains the snub. Some Tesla models, like the Model 3, start under $50,000, so they still qualify under the standard price cap. But higher-end versions won't get the same break as Rivian and Lucid.

For first-time EV buyers in California, the choice just got more interesting. They can pick from Tesla, Rivian, or Lucid—as long as the Tesla isn't too pricey. The program is designed to build long-term loyalty, and by favoring local companies, California is betting that new EV owners will stick with the brands that got them started.