Automotive News Europe — 2023-12-14
Automotive Industry
Three of France’s most popular battery-electric vehicles, the Dacia Spring minicar, the Tesla Model 3 and the MG4 compact car, will lose their eligibility for EV incentives under new requirements that favor cars made in France and Europe over those made in China.
All three of those models are built in China and imported to France. Under new eligibility requirements announced this year, the amount of carbon dioxide emissions in the manufacturing process will be taken into account.
Vehicles produced in China, where a majority of energy comes from fossil fuels, mostly coal, are at a significant disadvantage under the new program.
The European Commission and some automakers have expressed worries about inexpensive cars from China, especially EVs, taking market share from European-built cars. The commission has opened an investigation of Beijing's support for domestic EV makers, potentially resulting in new tariffs.
The list of eligible models, released Thursday by the French government, includes 24 BEVs from Stellantis and five from Renault. Tesla’s Model Y, which is built in Germany, is eligible for the bonus, but the Chinese-built Model 3 is not. Similarly, Smart’s #1 model, built in China, is not on the list, but the ForTwo, built in France, is.
Other models made in China, such as the BMW iX3, would not be eligible for incentives also because they are too expensive.
The loss of incentives is expected to hurt sales, an MG Motors spokesperson told Reuters on Thursday. The spokesperson said the company chose not to apply for subsidies for the model given criteria and deadlines imposed by the French governments.
Dacia executives had said that they expected the Spring to lose its eligibility. On Thursday, a spokesperson said Dacia would not comment on the eligibility list but said that impact on sales is not yet certain, because the Spring is sold throughout Europe. In 2024 it will be launched on the UK market.
The Dacia Spring, which ranked 15th overall among all cars sold in France with 26,951 sales through November, is also Europe’s least-expensive BEV, with a price before incentives of about €20,000. It was the second-best-selling EV in France after the Tesla Model Y.
The Tesla Model 3 was 20th overall, with 19,749 sales through November, and was the third-best-selling BEV. The MG4 ranked 27th overall, with 15,934 sales, and was the fourth-best-selling BEV.
Through October across Europe, there were 63,051 Model 3s, 52,250 MG4s and 48,954 Dacia Springs sold, according to figures from Dataforce.
Carbon footprint targeted
Bruno Le Maire, the French finance minister, hailed what he called the new rules' incentive for automakers to reduce their carbon footprint.
“Hundreds of millions of euros of public money went to vehicles with a very poor carbon footprint,” he said in a statement Thursday. “To be eligible for the bonus, an electric vehicle must have a limited environmental impact, during the manufacturing and transport stages."
President Emmanuel Macron's government has wanted to make French and European-made EVs more affordable for domestic consumers relative to cheaper vehicles produced in China.
Average EV price tops $71,000
The average retail price of an EV in Europe was more than €65,000 ($71,000) in the first half of 2023, compared with just over €31,000 in China, according to research by Jato Dynamics.
The French government already offered buyers a cash incentive of between €5,000 and €7,000 to get more electric cars on the road, at a total cost of €1 bn (1.1 bn) per year.
However, in the absence of cheap European-made EVs, a third of all incentives are going to consumers buying EVs made in China, French finance ministry officials say. The trend has helped spur a surge in imports and a growing competitive gap with domestic producers.
European automakers have rushed to launch inexpensive EVs that are built on the continent, including the Citroen New e-C3, at €23,900; a Fiat sibling model to the New e-C3; and the Renault 5, at €25,000. Looking ahead, even cheaper EVs are set for production, including a short-range version of the New e-C3, at €19,900 and the Renault Twingo, at less than €20,000.
Volkswagen and Renault are reportedly in talks to share development of a similar model for VW.