While the ecological bonus is currently granted to all electric models for less than 47,000 euros, the French automotive industry proposes that this subsidy only concerns models produced in Europe.
The Automotive Industry Platform (PFA) suggested on Wednesday April 19 that French public aid for the purchase of electric cars could be reserved for vehicles “made in Europe” to prevent them from benefiting mainly imported models, especially from China.
A response to US and Chinese protectionism
Last September, the Minister of the Economy Bruno Le Maire had already mentioned this idea to direct the ecological bonus towards “vehicles produced on European territory or strictly compliant with new environmental standards”.
This proposal, in the midst of a debate on the European response to American and Chinese protectionism, could be part of the next sector contract in preparation with the government for the period 2023-2027.
“The possibility of a bonus reserved for vehicles manufactured on European soil, like the IRA (Inflation Reduction Act) in the United States, is one of the lines of thought,” Marc Mortureux told Reuters. director general of the PFA, on the sidelines of a conference on the possibility of a “Buy European Act”.
“The aim is to give European industry time to consolidate,” he added. In France, the ecological bonus for the purchase of an electric car currently represents 5,000 euros, regardless of the geographical origin of the vehicle, but with a price ceiling of 47,000 euros, and up to 7,000 euros under conditions of resources.
Lower prices at Tesla as a trigger?
At the beginning of the year, the American Tesla became eligible for this aid thanks to a reduction in its prices. The European decision to ban sales of thermal engine vehicles in 2035 raises fears that the continent does not have a sufficient alternative supply of electric vehicles to meet demand, particularly in the entry-level segment.
Europe has set up numerous battery factories on its soil to reduce its dependence on Asia, but it may not be ready in time in the event of a commercial offensive by Chinese electric vehicles more affordable. The timetable for the implementation in France of “social leasing” promised by the President of the Republic Emmanuel Macron – a system of assistance for low-income households allowing them to afford an electric car from 100 euros per month – is also found retarded.
“The reason why this offer was not deployed from July 2022 is precisely so as not to make it the gateway for Chinese vehicles in Europe”, underlined David Amiel, Renaissance deputy and member of the Finance Committee of the National Assembly, during the conference. “We want to be able to structure this offer and (have) in front of French and European constructions that can respond to it.”
Deep disagreements on this issue in Europe
The establishment of a European preference, however, arouses deep disagreements within Europe because it goes against the tradition of free trade of the bloc. The opinion of players in the sector also depends on their own exposure to the American or Chinese markets. Ahead of the conference, PFA President Luc Chatel waved off the Chinese threat and called “Fit for 55” – the EU’s goal to reduce EU greenhouse gas emissions a at least 55% by 2030 – of “largest abandonment of sovereignty in history.”
“A continent which invented the automobile, which perfectly masters all its technology from A to Z, with great competitiveness, decides unilaterally to abandon its technology and worse, to choose the technology which its neighboring competitor masters”, a- he declared.
To defend its industry, Europe can also restrict imports by setting specific standards, but the process takes time. It can also integrate processed products – including cars – into the EU’s border carbon tax mechanism, currently limited to raw materials, a move that is being considered but the details of which are still being worked out.
