France cuts EV subsidies as sales increase

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After the French government decided to increase its subsidies for electric cars and plug-in hybrids up to 7,000 euros a few months ago, the subsidies are due to be reduced again from 2021. At the same time, the France is strengthening penalties for penalties for high CO2 emissions.According to a budget presented yesterday by Bruno Le Maire, Minister of the Economy and Finance, the premium for purely electric cars will currently be 7,000 euros at 6,000 euros in 2021 and further reduced to 5,000 euros in 2022. The government will halve the state. subsidy for plug-in hybrids to 1,000 euros next year. This subsidy will in principle only apply to vehicles with a maximum amount of 45,000 euros.

The special subsidy for corporate fleets will also be reduced by 1,000 euros over the next two years compared to the current subsidy of 5,000 euros. The only thing that remains intact is a separate incentive to switch to electric vehicles for low-income households in the amount of 3,000 euros.

Like Germany, France decided to increase subsidy rates in May 2020 as part of a restructuring plan for the automotive industry. The main reason was the fall in sales due to the Corona crisis. However, the French government has taken a more moderate approach, reducing only the maximum subsidy rate from 6,000 to 7,000 euros. In the short term, demand was also boosted by a scrapping program for private buyers. This had an effect: according to statistics from the industry group CCAF cited by Bloomberg, electric vehicles accounted for 6.1% of registrations on the French market in the first eight months of the year – compared to only 1.9% in 2019. Plug-in hybrids also gained a larger market share.

Bruno Le Maire describes this decision as “in line with the development of the electricity market”. The bonus will be maintained at an ambitious but declining level, because this type of vehicle will become more competitive compared to models with thermal engines. Incidentally, the government already intended to slowly reduce subsidy rates again when it introduced the reformed bonus-malus system in December 2019 before the global pandemic.

Regarding the environmental penalty, France will continue to tighten the screws. The “ecological penalty” is an environmental tax which applies to vehicles with a certain level of CO2 emissions and is payable once upon registration. The penalties are staggered, the maximum rate for vehicles emitting more than 225 grams of CO2 per kilometer currently amounting to 20,000 euros. According to the current draft budget, the maximum rate is to be doubled again in 2021 to 40,000 euros, then increased to 50,000 euros in 2022.

This is of course the extreme case. The threshold of the penalty is currently an emission of 138 grams of CO2 per kilometer (according to WLTP). For example, anyone emitting between 138 and 160 grams of CO2 per kilometer will have to pay 1,000 euros for registration. In all cases, the limit is now to be lowered from the aforementioned 138 grams to 131 grams from January 1, 2021 and to 123 grams in 2022. With the increase in the penalty, a potential tax proportional to the weight of the vehicles mentioned recently in any France is now off the table for the moment.

The French automotive lobby La Plateforme Automobile is naturally very critical of the measures taken by the government: “To make the bonus-penalty a real instrument of ecological transition, the bonus must also advance, otherwise the penalty will only become a new hidden tax, ”says Marc Mortureux, director general of the organization.

Reporting by Cora Werwitzke, France.

bloomberg.com, francetvinfo.fr, lesechos.fr (both in French)



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