France Cuts Purchase Incentives for Chinese BEVs

While European Union leaders dither over what to do about inexpensive battery-electric vehicles flooding into the market from China, France goes it alone and excludes many of the models from consumer purchase subsidies.

Using assessments of vehicle production CO2 emissions by the French agency for ecological transition, Ademe, cash incentives for consumers to switch to BEVs now hugely favor vehicles made in France and Europe over models manufactured in China, Reuters reports.

The government argues that vehicles built in China rely heavily on coal-generated electricity, greatly increasing its BEVs' overall lifecycle CO2 emissions.

About 65% of BEVs sold in France are currently eligible for buyers’ cash incentives of between €5,000 ($5,469) and €7,000 ($7,657) in a bid to get more zero-tailpipe-emission vehicles on the road, at a total annual cost of €1 billion ($1.1 billion). Qualification for the subsidy now takes production CO2 emissions into account, meaning the list of eligible models favors European vehicles made using a greener mix of energies than those available in China.

The new eligibility list includes 24 models produced by Franco-Italian group Stellantis and five by French carmaker Renault. Elon Musk's Tesla Model Y, built mainly in Berlin, will be eligible but not its Chinese-made best seller, the Model 3. Renault’s budget sub-brand Dacia will also see its Dacia Spring model, imported from China, excluded from the list.

The French government wants to promote less-costly BEVs especially because the average retail price of the models in Europe was more than €65,000 ($71,000) in the first half of 2023, compared with just over €31,000 for the government-subsidized cars made in China, according to research by Jato Dynamics.

Because of this price disparity, say French finance ministry officials, about a third of all incentives are going to consumers buying BEVs made in China. The trend has helped spur a surge in imports and a growing competitive gap with domestic producers.

French Finance Minister Bruno Le Maire hails what he calls the new rules' incentive for automakers to reduce their carbon footprint. In a statement he says, “We will no longer be subsidizing car production that emits too much CO2.”