On Monday, the French government announced the suspension of a program to subsidize the leasing of electric cars for low earners throughout the remainder of this year due to unexpectedly high demand. Since the beginning of 2024, individuals earning less than 15,400 euros ($16,600) annually have been eligible to lease an all-electric vehicle for a monthly fee ranging from 100 to 150 euros under this initiative. It was meant to boost demand for electric cars among people who otherwise could not afford them, while also helping France’s struggling carmakers make EVs more accessible.
Economists estimate about 4 million households in France meet the criteria. But the government has now announced it will limit the number of subsidized leasing places to 250,000 this year and 200,000 in 2025. It will also only allow the program to be offered for EU-made vehicles to ensure cheaper Chinese models do not swamp it.
The move is the latest step in Paris’s push to make EVs more affordable and its efforts to fight what it sees as unfair competition from China, where state-backed subsidies have made carbon-free cars significantly cheaper than their imported rivals. The new EV leasing program aims to make EVs produced in France or Europe more affordable and boost local employment. Still, it could also set a precedent for other European governments looking to counter China’s influence on their green industry policies.
In addition to the EV leasing scheme, the government plans to tighten up its ‘green bonus’ rules to ensure only those vehicles with a minimum life cycle footprint are eligible for subsidies. The revised rules will also more closely consider the extent to which an EV is made from renewable sources. The changes, effective in January 2024, are designed to help France compete with a growing number of cheap Chinese EVs.
According to the list published by the French government on Monday, several EVs produced by Chinese manufacturers, including the Dacia Spring and four SAIC MG models, would lose eligibility for the subsidy. EVs from premium brands that sell at higher prices and significantly impact carbon emissions, such as the Tesla Model 3 and Mercedes-Benz EQ AMG F-Cell, are unaffected.
The French government says its revised rules will comply with World Trade Organisation rules on protectionism and are justified as ensuring the environment. They will also help to reduce the gap between French and Chinese carmakers’ production capacities to prevent the latter from flooding the EU market with low-cost EVs. A separate plan to make it easier for households to buy EVs is expected to be rolled out later this year. The measure is part of a more comprehensive package of measures to reduce greenhouse gas emissions and improve commuter rail services to boost car-free travel. The complete package will be presented to the French parliament on Wednesday. The goal is to cut the country’s carbon dioxide emissions by 55% by 2030 compared with 1990.