French government outlines $13 billion car industry rescue package

France is planned to become a global hub of EV development.

The French government has pledged €8 billion (AUD$13.27 billion) to helping the country’s automotive industry to recover following the coronavirus pandemic.

As part of the rescue package, €1bn (AUD$1.6 billion) will go towards encouraging electric vehicle (EV) adoption, including grants of up to €7000 ($11,600). President Emmanuel Macron’s government is committed to keeping France at the forefront of EV development, with plans to produce a million ‘clean cars’ domestically before 2025.

During a visit to a Valeo factory in northern France, Macron spoke of ‘relocalising’ domestic automotive production. Renault and the PSA Group – the country’s leading vehicle manufacturers – will work alongside French energy supplier Total to develop batteries for electrified vehicles, he confirmed, and will continue to focus production in France in return for the financial aid.

“We need a motivational goal: make France Europe’s top producer of clean vehicles by bringing output to more than one million electric and hybrid cars per year over the next five years,” Macron is quoted as saying by BBC News.

It’s hoped that the new financial incentives for consumers – including a €3000 ($5,000) subsidy for those swapping into a less-polluting vehicle – will help to quickly sell some 400,000 vehicles that have been stuck at dealerships since the beginning of the pandemic.

Electric cars costing less than €45,000 ($75,000) are now eligible for a €7000 ($11,600) grant, up from €6000 ($9,950). Plug-in hybrid buyers can claim a €2000 ($3,300) subsidy as long as the vehicle is capable of travelling 31 miles on electric power and costs less than €50,000 ($83,000).

The revised EV incentives – coming into effect on 1 June and running until 31 December – are now applicable to 75% of French households, following a relaxation of the income requirements.

France’s automotive industry has been particularly hard-hit by the pandemic, with new car sales falling 89% in April as a result of dealerships closing and customers staying at home. The government has stepped in to subsidise the salaries of around 250,000 workers in the industry.

Macron has also announced that the government won’t commit to a €5bn ($8.3bn) loan for struggling Renault until the company’s management had discussed the future of its workforce and factories with union representatives. Talks are set to conclude on Friday, amid reports that the manufacturer is planning to cut 5000 jobs by 2024, axe slow-selling models and potentially close some factories.

Additional measures aimed at reviving France’s car industry include funding factory upgrade programmes and investing in automotive start-up companies.

Felix Page

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