The French Government is revamping its current electric vehicle program with new cash incentives to aid buyers to afford clean energy car models by January 2024, EURACTIV reports.
The move is part of the government’s efforts to give a significant edge to local automakers against Chinese companies.
Green bonus details
France’s “green bonus” originally offered €5,000-flat cash incentive for all electric vehicle models regardless of their full production line.
Now, the government aims to revamp this policy to also include the model’s production cycle and green qualities by designating a “green score.” It will also give a major advantage to locally produced EVs.
That said, the government will “reward the greenest EVs, especially those made in France and the EU.”
Energy Transition Minister Agnès Pannier-Runacher told BFMTV.
Apart from reviving local production, the policy changes will also increase local job opportunities and lower EV costs.
The government has yet to disclose the scoring details in a decree on Tuesday. Nonetheless, the report noted that it will include six key CO2-emitting factors, including the following:
- emissions from steel and aluminium production
- usage of critical raw materials in both the body of the car and the battery
- the car’s assembly and transport to the destination of the buyer
The cash incentive ranges from €5,000 per vehicle to €7,000 for poorer families. Notably, the government allocated €1 billion to fund this EV policy.
Chinese brands’ threat
Chinese automakers continue to dominate the electric vehicle adoption in the country and even in the whole of Europe. They accounted for a notable 8% of the region’s EV industry last year.
European Commission forecasts that Chinese brands can further grow their market share to 15% by 2025.
That said, the French government decided to exclude China-made cars from its green bonus, like Dacia Spring and MG.
“A car made in China with coal-produced electricity will not benefit from the green bonus.”
Energy Transition Minister Agnès Pannier-Runacher
Chinese brands’ dominance in the EU is largely due to their more affordable models than local brands’ larger and higher-end SUVs.
“French and European carmakers have been ringing alarm bells over the fast reversing of trends in EU exports to China.”
Elvire Fabry, Jacques Delors Institute’s Senior Researcher
Regaining the market
The green bonus is crucial to the French Government’s efforts to support local brands against Chinese automakers.
The local government aims to largely contribute to cutting the region’s dependence on China.
In hindsight, French Economy Minister Bruno Le Maire shared plans to expand the foreign investment screening scope to the country’s mining industry. The Minister aims to improve the management of critical mineral extraction and processing like lithium for EV batteries.
As we all know, China currently leads in processing most of these raw minerals. According to the German Institute for Economic Research (DIW), the country only contributes 9% of the world’s lithium. However, 60% of the lithium is refined there.
“It is a crucial industry for the clean economy, with a huge potential for Europe. But global markets are now flooded with cheaper Chinese electric cars. And their price is kept artificially low by huge state subsidies.”
European Commission chief Ursula von der Leyen
The French Government’s effort to promote clean energy vehicles and support local brands’ products is crucial for the domestic industry to thrive against the strong presence of Chinese companies and regain their share in the global market.
