France has unveiled a new subsidy program aimed at boosting local production of zero-emission vehicles while excluding Chinese electric vehicles (EVs). Under this program, eligible EVs can receive subsidies of up to €7,000 ($7,640) per car. However, the subsidies are contingent on the vehicles' environmental impact, effectively excluding EVs made in China.
Finance Minister Bruno Le Maire stated that France will no longer provide subsidies to vehicles that emit excessive amounts of CO2. As a result, car manufacturers will be incentivized to decarbonize their production processes in order to qualify for the bonus. The move comes in the wake of the European Union's investigation into alleged unfair subsidies granted to China's EV industry.
Starting tomorrow, France will offer variable rebates based on household income for EVs costing less than €47,000. Along with encouraging local production of zero-emission vehicles and their components, the policy aims to address concerns over China's larger carbon footprint resulting from coal reliance and the logistics associated with transporting Chinese-made EVs to Europe.
The list of eligible vehicles for subsidies includes premium EVs from manufacturers such as Tesla, Mercedes-Benz, and BMW. Notably absent from the list are cheaper EVs made in China, like Renault's Dacia Spring and SAIC Motor's MG 4, as well as BMW's iX3 SUV. Even Tesla's Model 3, produced both in China and the US, did not make the cut.
Additionally, certain EV models will be eligible for a government-sponsored leasing scheme. This initiative will allow lower-income households to lease EVs for as little as €150 a month. President Emmanuel Macron has pledged to make zero-emission vehicles more affordable, particularly for the least well-off households. As part of this commitment, he announced that some households will be able to lease electric cars for just €100 a month without any down payment.
The French government aims to bolster domestic production by supporting the purchase and leasing of EVs manufactured within the country. Macron emphasized the importance of choosing electric vehicles "made at home" in a video message, further highlighting a shift towards local production.
France believes that its new rules comply with World Trade Organization regulations on protectionism, as they are justified as measures to safeguard the environment. Prior to the announcement of the eligible vehicle list, a government advisor expressed confidence that the program would not violate international trade laws.
However, the EU's ongoing investigation into subsidies granted to China's EV industry has raised concerns about the potential for a trade dispute. European leaders are seeking to enhance economic independence while maintaining access to the vast Chinese market, especially considering the growing trade deficits. As such, the French subsidy program aims to strike a balance between supporting local production and addressing environmental concerns.