The French government officially released the list of eligible electric vehicles for its federal tax credits of up to €7,000 yesterday, December 14. As reported by Reuters, the updated rules now exclude made-in-China models like the Tesla Model 3 and the low-cost Dacia Spring.
Green Bonus to support European-made EVs
France’s Green Bonus clearly attempts to aid locally produced models in competing with cheaper electric vehicles from Chinese brands.
According to the report, 65% of EVs available in the French market will gain access to the incentives that now impose new rules per the amount of C02 emissions from EV production. The mix comprises some 60 EV models, including 24 models from Franco-Italian automaker Stellantis, five from French brand Renault, and one from American giant Tesla.
As mentioned, the Shanghai-made Tesla Model 3 did not make the cut. Nonetheless, Tesla Model Y customers can access the incentives under the Green Bonus.
The changes gained fuss from Chinese automakers, like SAIC-owned MG Motors. It even disclosed the reason it decided not to apply the MG4 for the scheme was because it is “designed to exclude us.”
“There are cars that will entirely lose their competitiveness.”
MG spokesperson via Reuters
Purpose
French Finance Minister Bruno Le Maire clarified that the introduction of the new rules for the Green Bonus aims to lower carbon emissions in electric vehicle production.
“We will no longer be subsidising car production that emits too much CO2.”
French Finance Minister Bruno Le Maire
In addition, the French government aims to aid French and European automakers in offering cheaper options for local buyers to compete with Chinese brands’ affordable offerings.
For context, Jato Dynamics estimates that Europe-made EVs have an average retail price of over 65,000 euros ($71,000) in H1 2023. Meanwhile, it only costs over 31,000 euros in China.
Significance
France’s Green Bonus already launched cash incentives from 5,000 to 7,000 euros at an annual total cost of 1 billion euros ($1.1 billion), according to Electrek.
However, French finance ministry officials stated that the lack of affordable locally produced models enables Chinese-made EVs to take a third of all the incentives. In effect, EV imports have significantly grown since the launch of the incentives. It intensified competition between China-made models and local producers.
With the introduction of the new rules, many China-made EVs will lose access to the incentives as they use coal-generated electricity. One of these models, Dacia Spring, is the cheapest EV on the market.
All that said, the revamped guidelines will significantly aid local EV producers in staying competitive against Chinese automakers. It will also boost the French manufacturing industry with potential investments from global players. It will play a significant role in the government’s efforts to urge local buyers to “buy from Europe.”
