France to reserve EV bonus for European cars, batteries

Production of the Megane E-Tech full-electric compact at Renault's Douai, France, assembly plant. Renault's EV factories in France are seeking ways to reduce their carbon footprint.

PARIS -- The French government is seeking to limit incentives for buying new full-electric vehicles to those built in Europe, President Emmanuel Macon said, part of a package of environmentally friendly business incentives meant to boost French competitiveness.

EVs sold in France are eligible for a 5,000-euro ($5,500) credit, provided their maximum price is below 47,000 euros and their weight is below 2.4 tons. Tesla has recently lowered the price of its Model 3 sedan and Model Y SUV to make them eligible, sparking criticism that French taxpayers are subsidizing foreign brands.

Under Macron's proposal Thursday, the EV credit would be reserved for cars that have a low-carbon footprint, meaning that they and their batteries are built with sustainable energy. That would largely exclude Chinese automakers, who have recently made inroads with lower-cost EVs, especially from SAIC's MG brand.

The Spring battery-electric minicar from Renault's Dacia brand is also winning customers in Europe. It is imported from China.

"We're going to support batteries and vehicles made in Europe because their carbon footprint is good; we're not going to use French taxpayers' money to boost non-European industry," Macron said, adding that the proposal did not amount to "protectionism."

Automakers who produce in Europe are seeking ways to decarbonize their production and supply chains ahead of the EU's 2050 target for carbon neutrality.

Macron's government wants to fire up investment in environmentally friendly technologies so that France can compete with U.S. companies boosted by the Biden administration's $430 billion Inflation Reduction Act (IRA), which includes major tax subsidies to cut carbon emission, boost domestic production and manufacturing.

The so-called Green Industry bill will be submitted to lawmakers on Tuesday and would be included in the 2024 budget. The Macron administration says it will generate 20 billion euros in investment and generate tens of thousands of jobs.

"This financing framework should help us compete with the Americans' IRA," Macron said as he outlined measures to reverse France's long-term industrial decline.

The measure would cover companies' capital expenditures on 25 percent to 40 percent of their investments in wind and solar power facilities, heat pumps and batteries, presidency officials said.

Reuters contributed to this report

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