Days after the European Commission’s announcement that it was investigating how subsidies have caused a flood of Chinese EVs to invade the continent, France appears to be readying legislation that will indirectly exclude EVs from China.
The country is reclassifying what it will consider eligible for a €5,000 (approximately $5,330) EV subsidy. The new rules will look at the broader picture of EV manufacturing. This will include examining whether EVs are as green as they say they are, with the type of power used in production being factored in to the equation.
However, according to Reuters, French President Emmanuel Macron and government ministers have made little bones about wanting to ensure that state cash isn’t used to prop up Chinese automakers. Instead, they would rather the money — in a scheme that costs €1 billion ($1.07 billion) each year— be kept within Europe.
Related: EU Considers Tariffs To Stop Chinese EV Invasion And Protect Its Automakers
The new classification will effectively exclude Chinese EVs from the incentive scheme. This is because the manufacturer of most Chinese electric cars utilizes coal-generated electricity.
Demand for EVs from China has reached new heights in Europe so much so, that Chinese automakers are looking for new ships to transport cars. Indeed, data shows that Chinese new energy vehicle shipments (which include both hybrids and EVs) to the European Union increased by 112 percent in the first seven months of 2023 and a staggering 361 percent from 2021.
Despite the European Commission announcing that it was looking into the flood of Chinese EVs, with possible tariffs mooted, a verdict isn’t expected to be delivered for another 13 months. France meanwhile has moved full-steam ahead with their new legislation. The fresh standards will come into play in December, with the government expected to publish a list of models that meet them.
But will the loss of the rebate make an impact on China’s cheap imports?
See Also: Unprecedented Global Demand For Chinese Cars Outstrips Shipping Capacity
The report suggests that the bonus could be a factor in cars costing less than €25,000 ($26,666). But regardless, there are still few options from European manufacturers on the market to play in that category. The Citroen e-C3, which is made in Slovakia, is not expected until next year. Neither is the Renault R5. Meanwhile, the MG4 will still cost €30,000 ($31,996), which is less than the competing Renault Megane priced at €38,000 ($40,523), or €33,000 ($35,191) with the incentive.
What about luring more manufacturers to set up manufacturing in the EU? Both BYD and SAIC (which owns MG, among others) have expressed interest in opening up European production facilities. However, when it comes to the Dacia Spring, which is imported to Europe from China, Renault CEO Luca De Meo recently said that he could live without the bonus.
