Thursday, June 8, 2023

France wants to put a stop to electric cars made in China

The next big controversy in the electric automotive sector promises to come from France. Yesterday, the government of Emmanuel Macron presented to the Council of Ministers a bill to reform the financial aid granted for the purchase of new electric carsin order to discourage the marketing of those manufactured outside Europe.

In simple terms, what is sought is to establish a mechanism that promotes the sale of electric cars of 100% European production. It would basically consist of Exclude cars from Asian manufacturers from government aidor brands that import them from that region (Tesla, for example).

The measure has already received criticism for its protectionist nature. However, from the French government they assure that what is sought is to respond to a “triple challenge of sovereignty, sustainability and prosperity”. Bruno Le Maire, French Minister of Economy, Finance and Industrial and Digital Sovereignty, explained that, under the new law, it will no longer be enough for electric cars to produce no emissions or have a certain price to access aid. What is intended to be analyzed from now on is its entire “environmental footprint”.

“We will follow manufacturing-related emissions criteria, such as the carbon footprint of the steel used or the use of recycled and bio-based materials. The proposed measure is therefore intended to exclude from the automotive bonus vehicles whose production has a low environmental performance”.

Bruno Le Maire, Minister of Economy, Finance and Industrial and Digital Sovereignty of France.

France wants to discourage the purchase of Chinese or Tesla electric cars

Before moving forward, it is important to understand how government aid works to buy electric cars in France. these vehicles are eligible for a credit of 5,000 eurosas long as its price does not exceed 47,000 euros and its weight does not exceed 2,400 kilograms.

But the new Macron government bill seeks to reserve aid only for vehicles with a low carbon footprint. Thus, they intend to leave out those produced with materials that are not considered sustainable, that come from countries where energy generation is highly dependent on coal, or that must be imported from far away places and whose transport generates large emissions.

The legislation seems tailor-made to curb the assault of Chinese automakers in the European market. However, it could also impact electric cars from other countries, such as Japan and the United States. For now, the list of brands and models that would be excluded from government aid has not been disclosed, but it would include, basically, all those that are produced outside of Europe.

“We are going to support batteries and vehicles made in Europe because their carbon footprint is good. We are not going to use French taxpayers’ money to boost non-European industries,” said recently the president of France, although he denied that it was a protectionist measure.

Le Maire was more explicit about where the new bill is heading. “These measures will lead to reserving the bonus for vehicles produced in Europe. I remind you that electric cars manufactured on our continent emit 45% less on average than vehicles produced outside of Europe. Furthermore, we do not intend to publicly fund the development of factories in Asia,” he argued.

It will be interesting to hear what Elon Musk has to say on the subject. Let’s not forget that, although Tesla already has the Gigafactory Berlin running where it manufactures the Model Y, many of the vehicles he sells in Europe come from shanghai.

Stopping the Asian assault on the European market

That electric cars from Asian brands – from China, especially – have taken the European market by storm, is not news. Something that is not only seen in France, which is where you want to limit the application of government aid to boost the sale of vehicles manufactured in Europe.

In Spain, for example, the MG4from MG Motor, a British firm, but a subsidiary of the Chinese automaker SAIC Motor, was the electric car with highest number of registrations during last April. While the Dacia Springwhich is imported from China, was in sixth place on the list.

In fact, the case of the Dacia Spring is quite curious, since it is the best-selling 100% electric urban vehicle in France. Although it may be left out of government aid because it is manufactured in Asia, from Renault came out to defend the bill. To the point that they argued that said model represents a tiny portion of the automaker’s efforts in the electric car sector.

Other points of the legislation are already generating a lot of noise. For example, if all European car factories will be able to meet the emission criteria that France intends to impose. In Germany, to cite one case, they would already be looking at this proposal out of the corner of their eyes.

The bill also declares battery factories to be of “greater national interest.”. In this sense, Le Maire assured that the state will take measures to promote its installation in French territory. For this, for example, the procedures for electrical connection, building permits and local urban plans will be accelerated.

As for when the law could be passed and take effect, it is still not entirely clear. The intention is that the new government aid only for European electric cars begin to apply before the end of the year. Although it would not be strange if they only apply from 2024.

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