Mobility Portal, Spain
Date: February 22, 2024
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By Mobility Portal
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Cuts to EV incentives: Can France maintain its leading role in the eMobility market?

During the initial 12 months of the ecological bonus, electric vehicles showed a growth of 140% in France. However, with the 20 percent cut, the country might experience declines in registrations, as happened in Germany.
Emmanuel Macron, President of France.
Emmanuel Macron, President of France.

Recently, France announced a 20 percent reduction in subsidies available to higher-income car buyers for the purchase of electric and hybrid vehicles.

This decision aims to prevent an overrun of the budget allocated to increasing the number of electric cars on the road.

Following the reduction in the incentive, some actors in the sector expressed their opposition.

One such case is Céline Kochinyan, Director of Sustainability at Deloitte, who spoke out against the reduction in the ecological bonus, as well as other measures related to environmental conservation.

“The multiplication of ‘common-sense setbacks’ does not allow us to ‘stay the course’ of the ecological transition,” Kochinyan posted on LinkedIn.

And she demands: “We must ask our elected officials to live up to their responsibilities in collective history.”

The concern over the reduction in aid is not without justification, as the recent case of Germany fuels this fear.

In early 2023, the German government began to gradually reduce support for the purchase of zero and low-emission cars.

Finally, in December, the authorities completely withdrew the subsidy.

Indeed, several eMobility sector actors claimed that the slowdown in electric vehicle sales was due to this measure.

Even for the remainder of 2024, the German Automobile Association predicts a 14 per cent decline in registrations.

Another fact that “justifies” concern about the reduction in aid is that the effects of thefrench Ecological bonus were reflected in sales from the outset.

While in 2019 there were 51,091 electric passenger cars registered, in 2020, the year the bonus was launched, 120,101 units were registered.

This represents a growth of over 140 per cent in the first twelve months of incentives.

Furthermore, in 2022, registrations increased to 220,323 units in just one year.

Additionally, it is worth noting that France recently reached one million registrations of purely battery-powered cars, a historic milestone.

In 2023, the country recorded an electric vehicle market share of 16.8 per cent, above the regional average of around 14 percent.

Will France be able to maintain this position despite the new cut? While it is too early to make estimates, the example of the neighbouring nation is a precedent to consider.

How has the Ecological bonus evolved in France?

This measure was first launched in 2020, with different amounts for cars, vans, motorcycles, and electric bicycles.

The French government’s plan provided for a validity period from June to December of that year.

Emmanuel Macron, President of France.
Emmanuel Macron, President of France.

“We have to make France the first nation in clean vehicle production in Europe,” declared President Emmanuel Macron at the time.

The amount allocated by the State for the operation of this tool was 8 billion euros.

In early 2022, the bonus was relaunched and has not been discontinued so far. However, it underwent some modifications.

Initially, the amount the State granted ranged from 5,000 to 7,000 euros. This assistance could be granted to any buyer of a low or zero-emission unit.

However, with the recent modifications, the minimum falls to 4,000 euros. This amount is granted to drivers of higher income.

Then, at the end of 2023, the legislation was reviewed by the authorities, undergoing some modifications.

Specifically, French officials chose to favour the European industry by excluding Chinese electric vehicle manufacturers from the incentives.

While some sector representatives described this measure as “beneficial,” others considered it “discriminatory.”

A spokesman for MG, owned by the Chinese SAIC Motor Corporation Limited, stated that “there are cars that will completely lose their competitiveness.”

In the same vein, a representative from BYD opposed the new implementation.

“The more the government threatens us, the less inclined we will be to establish a factory in France,” the source affirmed.

Read more: Electrified Olympics: These are the companies that will contribute to the electrification of transportation in the Paris 2024 edition

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