New electric vehicle incentives announced in France

19 September 2023

France, home to automotive giants like Renault and Stellantis, has raised its shields against an increasingly competitive Chinese electric vehicle market. The French government announced a revamped incentive program set to kick off in January 2024. But it's not just about the environment anymore; it's a play to revitalize and prioritize European carmaking.

The previous “green bonus” system in France, which provided a flat $5,400 for every EV, has undergone a facelift. The new system now considers factors beyond merely the emissions produced while driving. “We used to only focus on CO2 emissions while driving” but ignored the entire manufacturing process, said the government. With this change, every EV will now receive a 'green score' that considers its entire life cycle, from the sourcing of materials to its assembly.

These amendments aim to champion not just the greenest EVs, but those predominantly manufactured in the European Union (EU) and, ideally, France. Minister for Energy Transition, Agnès Pannier-Runacher, articulated that this move aims to bolster local employment and, interestingly, suppress the overall car prices. Now, how’s that for an economic jolt?

This new ‘green score’ system will factor in six fresh CO2 emission variables, accounting for emissions from steel and aluminum production, usage of vital raw materials in the car’s structure and battery, and the logistics of transporting the car to its final destination. The incentives can climb to $5,400 per car and peak at $7,500 for households with lower incomes. And for those of you doing the math, yes, a cool $1 billion has been allocated to fund this program.

Now, for some shade – Pannier-Runacher hinted, “A car made in China with coal-produced electricity won’t get a penny from the green bonus.” Talk about throwing down the gauntlet! Chinese car models such as the Dacia Spring and the China MG won't be included in the incentive program, with a full directory of the snubbed EVs to come out in December. It does sound a little counter-productive though, seeing Europe's best-selling EV from Renault Group ending up on the blacklist but we bet you bottom dollar that Dacia will find a way around this obstacle.

Despite Chinese brands commanding only 8% of the EU's electric vehicle market in 2022, projections reveal they could soar to 15% by 2025. Why? It might have something to do with Chinese EV prices plummeting by nearly 50% between 2015 and 2022, as opposed to European EV prices which climbed 17%. Although it all depends on where you check your prices - dealer forecourts tell different stories.

Clearly, the French and their European counterparts have heard the wake-up call. Instead of focusing on the luxury SUV market, the Chinese have been churning out more affordable alternatives, becoming ever more appealing to EU consumers.

France's intent to rein in dependency on China isn’t exactly a new song. In recent history, Economy Minister Bruno Le Maire expanded the screening process of foreign investment in the mining sector. The aim? To keep tabs on critical raw materials like lithium, pivotal in the production of EV batteries. While China might mine a mere 9% of the world's lithium, they refine a whopping 60% of it.

In tandem with these national efforts, European Union powerhouses have also chimed in. European Commission Chief, Ursula von der Leyen, unveiled a new probe against Chinese EVs, primarily due to extensive lobbying from – you guessed it – the French.

With this restructuring of the ‘green bonus’, France seems determined to anchor its position in the automotive realm, valiantly championing European-made vehicles. However, one can't help but wonder: will these measures effectively deter the Chinese EV tidal wave? Or will they open customers' eyes and make them realize the only wave out there is the one of outdated, low-quality, and overpriced EVs from legacy automakers. All we have to do is sit and wait and let the time give us an answer.

Via