France’s push to clamp down on carbon emissions in the electric vehicle (EV) manufacturing process has effectively cut-off most China-made cars from its subsidy programme.
Europe’s third-largest economy unveiled revamped rules on consumer cash incentives for EVs on Thursday, and included a new criteria for eligibility — the amount of carbon emitted in the manufacturing of the car.
That means many Chinese-made EVs will no longer qualify for subsidies worth up to €7000 ($7,700), as China’s auto industry relies heavily on coal-generated electricity.
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“We will no longer be subsidising car production that emits too much CO2,” French Finance Minister Bruno Le Maire said in a statement.
Le Maire said the new rules will give automakers an incentive to reduce their carbon footprint.
In September, one French official told Nikkei Asia that producing one small sedan in China creates “45% more emissions” than one made in Europe.
SAIC, Tesla hit
The updated scheme goes into effect on Friday, with around 65% of electric cars sold in France eligible for it. The list of eligible models includes 24 produced by Franco-Italian group Stellantis and five by French carmaker Renault.
Elon Musk’s Tesla Model Y will be eligible but not its Model 3, which is made in China.
The Model Y, which is larger and more expensive, is made mainly in Berlin and was the top selling EV in France over the first 11 months of the year.
Electric vehicle brand MG Motors, owned by China’s SAIC, said it expects the new rules to weigh on the French EV market.
“There are cars that will entirely lose their competitiveness”, an MG spokesperson said.
The brand had decided not to apply for the bonus scheme for its MG4 model because it was “designed to exclude us”, the spokesperson said.
The Ademe agency overseeing the process studied the eligibility of almost 500 EV models and their variants to include in the scheme.
Dacia, the low-cost Renault brand, also saw its Spring model imported from China excluded from the list.
Slowing ‘invasion’ of China EVs
President Emmanuel Macron’s government has for long wanted to make French and European-made EVs more affordable for domestic consumers relative to cheaper vehicles produced in China.
The average retail price of an EV in Europe was more than 65,000 euros ($71,000) in the first half of 2023, compared with just over 31,000 euros in China, according to research by Jato Dynamics.
The French government already offered buyers a cash incentive of between 5,000 and 7,000 euros to get more electric cars on the road, at a total cost of 1 billion euros ($1.1 billion) per year.
However, in the absence of cheap European-made EVs, a third of all incentives were going to consumers buying EVs made in China, French finance ministry officials say.
The trend has helped spur a surge in imports and a growing competitive gap with domestic producers.
Carlos Tavares, the CEO of Stellantis, which owns French carmaker Peugeot described the flood of Chinese EVs in Europe as an “invasion” and competition with Chinese manufacturers as “extremely brutal”.
- Reuters, with additional editing by Vishakha Saxena
Also read:
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Stellantis and CATL to Build EV Battery Factory in Europe
China, US EV Sales Lead Charge as Electric Revolution Speeds Up
China Looks to Deepen Ties With France Amid EU Probes – Nikkei
German Carmakers Fear EU’s China EV Probe: Minister – Politico
