Mercedes-Benz CEO Ola Källenius said the American Inflation Reduction Act has the “right ambition” to help accelerate the auto industry toward a decarbonized future.

“If political leaders make that a priority and are also willing to spend government money on that, that can be very helpful,” Källenius said on an earnings call from Germany on Friday.

But the executive warned against letting the legislation turn into a cudgel for U.S. protectionism.

“If there are protectionistic side effects, that is unwelcome,” Källenius told analysts.

Källenius said that over the past three decades, an “opening up of markets” driven by the World Trade Organization has created economic and wealth growth.

“To peel back and go into perhaps a more protectionistic direction would stifle that economic growth and would not be good for export-oriented economies and companies like ourselves,” he said.

The Inflation Reduction Act signed last summer incentivizes North America’s electric vehicle and battery production with a $7,500 tax credit on EV sales.

While the legislation, with its tax rules on sticker prices and household income caps, is likely to disqualify Mercedes’ luxury models in the near term, those vehicles should qualify for up to $7,500 in commercial clean vehicle tax credits.

“That is a net benefit to the customer and will lead to some impetus in the market for us,” Källenius said.

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