PARIS (Reuters) - France on Wednesday published new eligibility rules for electric car incentives to exclude EVs made in China, even though carmakers in Europe do not have more affordable rival models on the French market.
WHY IS FRANCE REVISING ITS EV BONUS ELIGIBILITY RULES?
The French government currently offers buyers a cash incentive of between 5,000 and 7,000 euros in cash for eligible models to get more electric cars on the road, at a total cost of 1 billion euros ($1.07 billion) per year.
However, in the absence of cheap European-made EVs, a third of all incentives are going to consumers buying EVs made in China, a French finance ministry source said. The trend has helped spur a surge in imports and a growing competitive gap with domestic producers.
The scheme will be revamped from Dec. 15 to take into account the carbon emitted in a model's manufacturing process.
President Emmanuel Macron and government ministers have made little secret that they want to make sure French state cash is not benefiting Chinese carmakers.
WHAT DO THE NEW RULES DO?
Under the new rules, car models will be scored against government-set thresholds for the amount of energy used to make their materials, in their assembly and transport to market, as well as what type of battery the vehicle has.
Because Chinese industry generally relies heavily on coal-generated electricity, the criteria are likely to put the bonus out of Chinese carmakers' reach.
The government, which is to publish in December the names of models meeting the new standards, says that the criteria are compliant with WTO rules because exemptions are allowed for health and environmental reasons.
WILL IT DO ANYTHING?
With Chinese cars estimated to cost 20% less than European-made competitors, the bonus could make a difference for vehicles with a price tag of less than 25,000 euros.
But French car buyers will have to wait because Stellantis' Slovakia-made e-C3 city car and Renault's France-made R5 are not due to hit the market until 2024.
Nonetheless, many EVs made in China will remain competitive even without the cash incentive.
With a starting price of 30,000 euros, SAIC group's MG4 will be less expensive than Renault's equivalent Megane compact car, which starts at 38,000 euros - or 33,000 euros with a 5,000-euro incentive.
Since its 46,000-euro starting price is just below the 47,000-euro price threshold for the bonus, Tesla's Y model - one of the best selling electric vehicles in France - could in theory also be impacted by the new rules for vehicles made in China.
S&P Global Mobility analyst Lorraine Morard said that even if most Chinese cars are ineligible for the bonus they would probably get 7-8% of France's electric car market next year, instead of 10% otherwise.
WILL MANUFACTURERS RELOCATE TO EUROPE?
Renault CEO Luca De Meo recently ruled out moving production of the Dacia Spring from China to Europe and said he could live without the bonus.
The model is currently one of the best-selling electric car's in France with the Tesla Y, Peugeot's e-208, Fiat's 500e, the Megane eTech and MG4.
MG's Chinese parent company SAIC has said that it is looking for a production site in Europe as is Chinese rival BYD, whose Dolphin model will compete in the same segment as the MG4 and Megane with a starting price of 29,000 euros.
($1 = 0.9330 euros)
France on Wednesday published new eligibility rules for electric car incentives to exclude EVs made in China, even though carmakers in Europe do not have more affordable rival models on the French market. WHY IS FRANCE REVISING ITS EV BONUS ELIGIBILITY RULES? The French government currently...
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