French President Emmanuel Macron has announced a massive increase in support for the French car industry. The head of state is thus reacting to the crisis at PSA and Renault – the main reason being the slump in sales due to the Corona crisis.
The aid package for the French car industry totals more than eight billion euros. Macron formulated the goal of putting one million clean cars on the roads within five years and becoming the “top producer of these vehicles in Europe”.
Support measures include purchase subsidies for electric cars as well as for conversions of combustion vehicles to electric ones, an increase of charging points and measures to consolidate production within France back from other countries.
For those in France looking to buy an electric car, the state subsidy is to increase from 6,000 to now 7,000 euros, valid up to a list price of 45,000 euros, only for private buyers and only in the period from June 1 to December 31, 2020. For commercial purchases of electric cars, the premium rises from 3,000 to 5,000 euros – in 2019 more than half of new car purchases were made by commercial owners. In both cases, the list price of the chosen vehicle must not exceed 45,000 euros in order to benefit from the full premium.
For electric cars that cost between 45,000 and 60,000 euros, the bonus is 3,000 euros; from 60,000 euros, no bonus at all is granted. Anyone who earns less than 18,000 euros a year, decommissions their old combustion engine and procures a new e-car can also expect a bonus of 5,000 euros as part of the “prime à la conversion”, i.e. they receive a total of 12,000 euros from the state for the procurement of a purely electric car. For plug-in hybrids, there is a bonus of 2,000 euros from an e-range of 50 km and up to a list price of 50,000 euros, and the number of charging points in France is to be tripled to 100,000 by the end of 2021.
In terms of production, the bulk of the aid package, around five billion euros, will go as a loan to Renault. The manufacturer already applied for such a loan a few days ago. But Bruno Le Maire had already announced that he did not want to grant the credit without conditions. Renault, he said, should position itself better in the area of electromobility and join the German-French battery consortium around PSA, Opel and Saft. According to Emmanuel Macron, Renault has now made exactly this commitment.
Marcon’s measures, as well as the drive to consolidate manufacturing within France, stands well with the restructuring of the Renault-Mitsubishi-Nissan alliance also announced today. The guiding principle of the cooperation is the so-called ‘leader-follower’ principle for regions, vehicles and technologies in order to achieve greater efficiency and competitiveness in these areas. This will put Renault in charge of leading technology and model-types for Europe, while the other two partners will focus on other global regions, with the idea that each company should follow the lead of the designated leader for each region. The companies hope that the new structure will put an end to the power-sharing quarrels that have lasted for over a year and a half. These broke out after Ghosn was dismissed at the end of 2018.
In addition, the French government is expecting Renault to present an austerity plan later this week, which will save billions and, according to media reports, will include plant closures. It remains to be seen whether the state credit granted will be able to sustain this: the government in Paris is anxious to preserve the approximately 1.3 million jobs at car manufacturers, suppliers and service companies.
Since the government is a shareholder of the two major French manufacturers, Macron has also weighed in to obtain guarantees of the location of future French electric vehicle production. In total, one million electric, hybrid or plug-in hybrid vehicles should be manufactured in France in 2025. This means that Renault is obliged to have future electric vehicles of the Renault-Nissan-Mitsubishi Alliance manufactured at the Normandy engine factory in Cléon (Seine -Maritimes) rather than in China, and quadruple the assembly of electric vehicles in France by 2024.
But it is not only the big car manufacturers who are fallen under the eye of the measures now decided by the French government. The state is putting on the table about 1 billion euros to boost French industrial supply. A fund armed with 200 million euros is to be created to support the future of the French car industry to give subsidies to help the digitalization, robotization, and industrial transformation. The focus here will be of environmental and ecological transformation – specifically also for small players in the sector who cannot afford these changes. Research and development in this sector will get a boost of a further 150 million euros.
Finally, an interesting measure for conversion companies rather than automobile manufacturers: a conversion premium. Retrofitting combustion engine vehicles with electric motors has only just been legal in France since March 2020 and several companies specialise in this area. One of them, Transition One, will be undertaking retrofits for 5,000 euros which corresponds to the amount granted in the new conversion premium.
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