France EV subsidies to take producer emissions into account

The minister said he was "not concerned" about the threat to Europe’s carmakers from Chinese electric vehicle imports

France is planning to roll out subsidies based on the producers’ emissions which will hit Chinese EV manufacturers, with the country’s finance minister Bruno Le Maire saying he is “not concerned” about the increasing import of cheaper Chinese electric cars.

Le Maire, speaking in Beijing where he met Chinese leaders to discuss trade and investment, said that France’s new automotive subsidies are “paving the way” for Europe’s car industry to withstand the threat of an influx of cheaper Chinese electric vehicle imports.

The French government had announced in May that in order to support green industries, it will only pay subsidies for new electric cars if their manufacturers are using clean energy sources in the production process. Financial Times reports that this policy will hit Chinese automakers, where the industry relies on electricity largely powered by coal.

“I think with our new legislative decisions, we pave the way in Europe for a less naive approach, taking into account the level of emissions of the industry,” said Le Maire.

> PM Sunak confirms dialogue with EU over threat to UK’s EV industry

In the recent months, some European manufacturers have sounded the alarm of the advances advances made by Chinese EVs, with the country taking the lead in battery production and its carmakers outselling western rivals in China’s domestic market.

While Chinese EV sales are still at an early stage in Europe, they could reach 1.5 million vehicles by 2030, equivalent to 13.5 per cent of the EU’s 2022 sales, according to Allianz.

For European carmakers, the simultaneous loss of market share at home and in China would have a severe impact. The groups face additional pressure from an EU policy requiring the phasing out of internal combustion engines by 2035. Under the new

French law, which is due to be fully adopted by parliament by year-end, however, Chinese-made electric vehicles would probably not qualify for incentives, which are worth between €5,000 and €7,000 per car for new electric vehicles.

Le Maire added: “Each year I’m spending €1.2bn to support the green industry and to support the EVs, never mind whether they have been produced by industry which is emitting a lot of CO₂ or by industry that is emitting less CO₂.

“I’m determined to support the European car industry and the French car industry.”

> 10 countries at the heart of EV manufacturing

Last month, a hybrid and electric car leasing company had called on the UK Government to do more to support Britain’s car industry, fearing the market could be dominated by Chinese models if no action was taken.

Keith Hawes, the Director of Nationwide Vehicle Contracts said: “The dominance in producing low-cost electric vehicles by the Chinese may or may not come as a surprise for some since they have been investing in EV vehicle technology for some considerable time.

“In 2022, China accounted for around 60 percent of global electric car sales. However, there are now security concerns surrounding using these cars in Britain following escalating geopolitical tensions between China and the West.

“MG is perhaps the best-known Chinese brand currently in the UK selling a very capable range of electric versions. Not as well known is that Volvo and their EV brand Polestar, together with LEVC (London Electric Vehicle Company – building taxis and commercial vehicles in Coventry) are all owned by Chinese Geely Automotive.”

> Jaguar Land Rover owner to build £4 billion EV battery gigafactory in the UK

Recently, Professor Jim Saker, president of the Institute of the Motor Industry, also warned that Britain’s roads could be “paralysed by Beijing” with electric cars made in China with “major security issues”.

In May, Ford and Jaguar Land Rover joined Stellantis, which owns the Citroën, Peugeot, Fiat, DS, Jeep, Alfa Romeo, Maserati and Abarth brands, in raising concerns over a EU rule change that could cast doubt on the country’s electric cars’ future.

The companies had said that they were struggling to meet the trade and cooperation agreement’s (TCA) “rules of origin” that require 40 per cent of an electric vehicle’s parts by value to originate in the UK or EU in order for it to qualify for trade without tariffs.

PM Rishi Sunak, when asked for a comment, had replied that he was “engaged in a dialogue” to negotiate the rule change”.

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