France prioritizes European EVs over Chinese in major incentive shakeup
Starting January 2024, France is introducing new cash incentives for electric vehicles (EVs) to support French and European carmakers against Chinese competition. The "green bonus," previously a flat €5,000 (around Rs. 4.55 lakh) for all EVs, will now factor in the car's life cycle and components, like the electric motors and battery packs. Energy Transition Minister Agnès Pannier-Runacher stated that the reform aims to reward the greenest EVs, especially those made in France, boosting local jobs.
Upcoming incentive scheme targets Chinese EVs
The revised green bonus will exclude Chinese-made EVs such as the Dacia Spring and several MG models. Pannier-Runacher explained that "a car made in China with coal-produced electricity will not benefit from the green bonus." Popular models like the Model 3 from Tesla will also lose federal tax incentives of up to €7,000 (roughly Rs. 6.38 lakh). However, Tesla's Model Y, which is assembled in Germany, remains eligible for subsidy along with other European-made cars.
A green score will be provided to evaluate all EVs
Under the new system, each EV will receive a "green score" based on six CO2-emitting factors. These include emissions from steel and aluminum production, usage of critical raw materials in the car body and battery, and the car's assembly and transport to the buyer's location. The bonus can reach up to €5,000 per car or even €7,000 for lower-income households. About €1 billion has been set aside to fund this initiative.
France's push for local production
France aims to produce over one million EVs by 2027 and bring EV production lines back to the country and the EU. Elvire Fabry, a senior researcher at the Jacques Delors Institute, noted that "French and European carmakers have been ringing alarm bells over the fast reversing of trends in EU exports to China." Chinese brands held 8% of the EU's electric vehicle market in 2022, and the European Commission predicts this could rise to 15% by 2025.
Broader EU efforts to curb Chinese influence
The green bonus is part of wider EU efforts to counter China's influence in the market. Economy Minister Bruno Le Maire announced plans to expand foreign investment screening in the mining sector to control the extraction and processing of critical raw materials like lithium. European Commission chief Ursula von der Leyen also launched a new anti-subsidy probe against Chinese EVs, stating that their prices are "kept artificially low by huge state subsidies."
