Mobility Portal, Spain
Date: July 4, 2024
Rethinking the French EV strategy: what is the “critical” impact of production offshoring?
By Lucía Colaluce
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Rethinking the French EV strategy: what is the “critical” impact of production offshoring?

The country is experiencing an increase in the adoption of EVs while facing the challenge of reduced national production and massive imports. Can France regain its competitiveness in car manufacturing amidst global competition?
Rethinking the French EV strategy

Since the beginning of 2024, France has registered about 200,000 new electric vehicles (EVs) and plug-in hybrids.

This translates into an increase of 13.7 percent compared to the same period in 2023, with 23,892 fully electric units registered in May alone.

Thus, the country has reached a total of 1,158,239 zero-emission cars registered, but the majority are manufactured abroad.

For example, the Peugeot 208, representing 11.14 percent of EV registrations in May this year, is mainly produced in Slovakia at the Trnava plant, although some specific models are also made in Morocco at the Kenitra plant.

On the other hand, the Renault Twingo, with a market share of 7.07 percent, is also assembled in Slovenia at the Novo Mesto plant.

The third most chosen zero-emission car, the Renault Megane-E, which covers 6.76 percent of sales, is manufactured in France, specifically at the Douai plant.

The Tesla Model Y, with a 5.95 percent share, is produced in China at the Shanghai Gigafactory and also in Germany at the Berlin-Brandenburg Gigafactory.

The Opel Corsa, ranking fifth with a 5.65 percent share, is made in Spain at the Figueruelas plant as well as in Germany at the Eisenach plant.

Finally, the remaining five on the list created by Avere-France, the Fiat 500, the Peugeot 2008, the Volkswagen ID.3, the BMW iX1, and the Tesla Model 3, are produced in countries such as Poland, Spain, China, Germany, and the United States.

This highlights a lack of local production.

A study conducted by the associations Fondation pour la Nature et l’Homme (FNH) and the Institut Mobilités en Transition (IMT) reveals the keys to this situation.

For more than two decades, the French automotive industry has been facing a process of offshoring that has halved since the early 2000s.

This phenomenon has especially affected smaller vehicle segments, while manufacturers have prioritized high-end models and SUVs, considered more profitable in current market conditions.

That is the growth of imports far exceeds the increase in national production, thus deepening the deficit in the French automotive sector.

Moreover, the document indicates that these relocations have resulted in a significant reduction in jobs, both among manufacturers and throughout the entire French automotive value chain.

In the last five years alone, total employment in the industry has decreased by seven to eight percent.

The deficit in the automotive trade balance began to manifest in 2008 as a consequence of the relocation of French manufacturers abroad, and it extended to the “equipment” sector in 2016.

Initially, the relocated assembly plants would have been supplied by factories that remained in France, but gradually, both by their own decision and under pressure from manufacturers, suppliers also moved part of their production to lower-cost countries.

So the question is, is there a positive future outlook for the entire value chain of the electric vehicle industry in France?

In fact, the associations that conducted the study respond with a “yes”.

Conducting a comparative analysis using as an example a fully electric urban vehicle manufactured in the country, they evaluated the theoretical cost of local production.

This was done specifically in a region like Hauts-de-France, compared to production in Spain, Slovakia, or China.

The results indicate that French production could maintain its competitiveness against these countries until 2030.

By fine-tuning these factors as precisely as possible, the competitiveness gap narrows to just 2.5 percent compared to Spain (about 400 euros per vehicle) and 2 percent compared to Slovakia (around 260 euros).

These minor differences prompt a reevaluation of the criteria for locating models or factories within the supply chain.

Moreover, this consideration becomes even more crucial when it comes to developing the battery value chain, which demands a more integrated approach and closer proximity between gigafactories and assembly plants.

Indeed, according to the study, a relocation of the production of 700,000 urban electric cars to French territory is projected, potentially leading to the creation of 25,800 jobs in France.

To achieve this, they suggest reorienting investments towards small vehicles with a high volume potential.

Additionally, they recommend incentivizing suppliers and equipment manufacturers to reinvest in productivity improvements around new industrial hubs through allocation policies, as well as supporting training and staff retraining plans in collaboration with the regions, necessary for the industrial transition.

Julien Beltoise, mobility director at FNH, states that “it is necessary to broaden the consideration of the carbon footprint in fiscal and regulatory tools”.

All this, focusing on directing production towards more environmentally friendly cars and “making France and Europe leaders in the production of small vehicles with low carbon emissions”.

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