French President Emmanuel Macron unveiled on Tuesday (26 May) an €8 billion aid package for the auto industry, which includes increased subsidies for electric car purchases and encourages manufacturers to relocate their factories back to France.
During a factory visit, Macron announced a raft of measures aimed at helping France’s industry recover from the coronavirus outbreak, which has shuttered production, put the sector’s 400,000 jobs at risk and is projected to slash car purchases this year.
“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,” the president told reporters.
Negotiations with the likes of Citroën, Peugeot and Renault have been ongoing for weeks and the €8 billion support package does not come without strings, as Macron has made it clear they are expected to do more domestically.
“The state will provide more than €8 billion in aid to the sector. In return, the car manufacturers have committed to relocate value-added production to France and to consolidate and maintain all industrial production at our sites,” the president said.
He added that any car models currently built in France should not be manufactured elsewhere. France’s big three marques have factories around the world to cater for different markets, and in Europe, facilities are located in Portugal, Slovakia, Spain, Turkey and more.
It was not immediately unclear if the support plan has specific conditions in terms of moving production back to France, although Renault will reportedly build electric motors at a plant in Normandy rather than in Asia, as previously planned, in order to access state aid.
The government has already brokered a separate €5 billion loan for Renault, which last month got the green light from European competition regulators, but Macron revealed that the money is being withheld as talks on the ‘Made in France’ issue continue with the firm.
Renault will also lend its weight to the Battery Alliance, a pan-European industrial push to boost battery production and increase supply in check with growing demand for electric vehicles.
Peugeot parent firm the PSA Group is already a subscriber and Renault’s membership of the ‘Airbus of batteries’ is understood to have been a non-negotiable aspect of the bailout package.
Both PSA and Renault pledged to ramp up significantly their electric vehicle production. That will likely benefit a planned merger between the former and Fiat-Chrysler, which the Italo-American group hopes will boost its own forays into the electric market.
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Macron’s €8bn scheme is also aimed at consumers, who will be able to benefit from new and improved subsidy schemes worth around €1bn.
For electric cars, the current premium of €6,000 for private citizens will increase to €7,000, while plug-in hybrids will be worth €2,000.
The French president warned that there will be 500,000 unsold vehicles sitting in factory car parks by the end of June, adding that “outside of wartime, it is unheard of”. To boost demand, the aid scheme includes a limited scrappage programme.
Until the end of the year, lower income households will be able to apply for a €3,000 grant to give up their old car and buy a new one, rising to €5,000 if the new purchase is an electric vehicle. The offer will only be eligible to the first 200,000 applicants.
Environmental groups had hoped to convince the government from setting up a scrappage scheme. Climate Action Network urged Macron earlier in the week to “clearly rule out the option of yet another scrapping premium for thermal vehicles”.
In order to support more electric cars on the road, the government will also bring forward the deadline for its goal of installing at least 100,000 charging points around France, from 2022 to 2021.
That mirrors a recent push by German Chancellor Angela Merkel to roll out more chargers across the Bundesrepublik. Germany plans to install at least 1 million by 2030.
[Edited by Zoran Radosavljevic]