New Cash Incentives to Boost Electric Vehicle Sales in France

France is set to introduce new cash incentives to encourage consumers to purchase electric vehicles (EVs) starting from January 2024. The move aims to support the French and European carmaking industries in their competition with Chinese rivals. Under the previous system, a flat €5,000 cash incentive was provided for all EVs, regardless of their production cycle or environmental attributes. However, the new rules will take into account the car’s life cycle and components, such as the electric battery, to determine eligibility for the incentive.

The government aims to give a “green score” to each EV, factoring in six new CO2-emitting elements, including emissions from steel and aluminium production, usage of critical raw materials, and the car’s assembly and transport. This score will prioritize the greenest EVs, particularly those made in France and the EU. The reform is expected to boost local job creation and reduce overall car prices.

The bonus can reach up to €7,000 for poorer households, and around €1 billion has been allocated to finance it. By providing these incentives, France intends to regain control over its EV production lines and reduce dependence on Chinese imports. Chinese EV brands currently hold 8% of the EU’s electric vehicle market, with projections indicating a potential increase to 15% by 2025. Chinese EVs have gained popularity due to their lower prices, which have dropped by 50% in recent years, making them more accessible to European consumers.

France’s efforts to regain control over its EV market extend beyond cash incentives. The country is also expanding foreign investment screening to the mining sector in order to manage critical raw material extraction and processing. Additionally, there have been calls for an anti-subsidy probe against Chinese EVs, as China has heavily subsidized and supported its EV sector for over a decade. These measures form part of broader EU efforts to curb China’s dominance in the single market and ensure fair competition.

Overall, the introduction of new cash incentives in France demonstrates the government’s commitment to promoting the adoption of electric vehicles while supporting the local carmaking industry. By prioritizing the greenest EVs and considering the entire life cycle of these vehicles, France aims to reduce its reliance on Chinese imports and maintain a competitive edge in the market.

– Euractiv: [Link to be added]
– European Commission data
– Ptolemus Consulting Group
– Jacques Delors Institute
– German Institute for Economic Research (DIW)