It was to be feared. During the presentation of the budget in early October and of the savings measures aimed at reducing the public deficit, the government announced that the overall amount of aid aimed at greening new car sales will increase this year by 1, 5 billion euros to around 700 million in 2025.
It remained to be seen how this serious plan would be implemented. It’s done. According to the information Echoes as we can confirm, the ecological bonus is significantly reduced, despite being more strongly influenced by the income levels of electric vehicle buyers. The measures will come into force as soon as the decree is published, “expected for this week”, says the Ministry of Industry.
“It’s really a hard blow”
Until now, this ecological bonus amounted to 7,000 euros for the poorest 50% of families, whose reference tax income was less than or equal to 15,400 euros. Now it will be 4,000 euros. The richest families, who could benefit from 4,000 euros, will receive only 2,000 or 3,000 euros depending on the case.
When contacted, the French Automobile Platform (PFA), the French lobby for the sector, refused to make any comment “until the publication of the decree”. While admitting that “this is in fact a real blow, since the budget for this aid has been halved, in a context of market reduction and stagnation in electricity sales”.
Another source is particularly concerned about the fate of 100% electric commercial vehicles. This category of vehicles, very popular with craftsmen, but also with SMEs and SMEs, is completely out of the system. “Support for the purchase of electric commercial vehicles will now be financed with energy savings bonds”, confirms Industry Minister Marc Ferracci. The terms will be defined in the coming weeks. » Bad news for the two French manufacturers, Renault and Stellantis, which together represent 70% of the French market.
Stellantis and Renault suffer the blow
Both groups are taking the blame. “For us, with 3,000 euros of help on average per electric vehicle, this represents 8% of all our sales in this category, all technologies combined,” indicates a Stellantis source. Tomorrow, if the aid allocated to this category were to decrease further, these same sales would inevitably suffer a collapse. Despite all our efforts to reduce costs and margins, our prices are still not attractive enough to allow artisans, or SME or micro-business owners, to invest in this technology. »
Another source from the same manufacturer goes further: “Since 2018 we have been obliged to sell one electric vehicle for every five combustion vehicles,” he recalls. So if we can’t do that, we will be forced to slow down our thermal sales to maintain this ratio and stay on track. »
End of conversion bonus
For the entire French automotive industry, already in terrible conditions, this is a cold shower. “The announcement is all the more violent because we thought we still had a few weeks to prepare,” confides another actor in the sector. There we can only submit. » Everyone fears the Chinese threat. “This reduction in aid is the best way to allow them to come and gain market share with us,” another source regrets. Benefiting from massive aid from Beijing, they can now offer very cheap vehicles. It will be even more difficult to compete. »
In government, these decisions are justified by the state of public finances. “The 2024 budget initially planned for the car bonus was exceeded by more than 400 million euros”, recalls the Ministry of Industry. Considering this huge overrun and the budgetary constraints, the government had no choice but to reduce the planned allocation for 2025.”
Instead, the principle of renewing social leasing (electric cars at 100 euros per month for low-income families) was adopted. But with terms that will also be revised significantly downwards. The plant will in fact cost 650 million euros in 2024, for 50,000 cars affected. The conversion bonus (previously called “scrapping bonus”), however, definitively disappears.
What impact will the reduction of the ecological bonus have on electric vehicle sales in France?
Time.news Interview: The Future of Electric Vehicles in France Post-Budget Cuts
Editor: Good morning, and welcome to Time.news. Today, we’re diving into a pressing topic concerning the French automotive industry: the recent changes to the ecological bonus and its implications for electric vehicle sales. Joining us is Dr. Claire Dubois, an expert in sustainable transportation and automotive policy. Dr. Dubois, thank you for being here.
Dr. Dubois: Thank you for having me.
Editor: Let’s start with the recent announcement. The government has reduced the ecological bonus significantly, cutting it from 7,000 euros for low-income families to just 4,000, while wealthier families face even steeper reductions. How do you perceive this shift in support?
Dr. Dubois: It’s really a hard blow, as many stakeholders have pointed out. The reduction of this bonus is likely to disincentivize potential buyers, particularly among lower-income groups who were more reliant on these incentives to make the switch to electric vehicles. The government claims they are focusing on a more equitable distribution of funds, but practically speaking, this might lead to stagnation in electric vehicle sales.
Editor: Indeed, the French Automobile Platform has also expressed concerns about the halving of the budget related to this aid amid a stagnating market. What do you see happening to the retail scene for electric vehicles in light of these changes?
Dr. Dubois: Given the current incentives, I anticipate a slump in sales for electric vehicles, particularly for manufacturers like Renault and Stellantis, which hold a significant market share. The increased upfront costs of electric vehicles, augmented by lessened government support, may deter many buyers.
Editor: You mentioned Renault and Stellantis. What specific challenges do you think these manufacturers will face as a result of the ecological bonus cuts?
Dr. Dubois: Both companies are highly dependent on the ecological bonuses to stimulate their sales. With the average aid now reduced to about 3,000 euros for many of their models, the margins may not remain attractive enough for artisans and small business owners to make the leap. Moreover, Stellantis has highlighted that they are required to maintain a sales ratio of electric to combustion vehicles, which dry sales of electric models may challenge, potentially slowing down their overall production and sales strategy.
Editor: The potential impact on 100% electric commercial vehicles is particularly alarming, considering their importance to many SMEs. How could the change in funding structure affect this segment?
Dr. Dubois: Yes, this is indeed concerning. The discontinuation of direct support for these vehicles poses a considerable risk. For SMEs that rely on commercial electric vehicles, this could mean financial strains and an inability to access the latest technology, leaving them at a disadvantage against competitors using combustion engines. The proposed reliance on energy savings bonds could also complicate the process and create further uncertainty.
Editor: The Government’s move to divert funds to energy savings bonds could possibly streamline the allocation process. Do you see any silver lining in their approach?
Dr. Dubois: In theory, using energy savings bonds could provide a more sustainable funding mechanism that ties into broader energy efficiency goals. However, the immediate impact appears negative, and we must balance long-term benefits with current market realities. It could create confusion and delay for potential buyers in the near term.
Editor: Would you say there are alternatives that could soften the blow of these cuts for consumers and manufacturers alike?
Dr. Dubois: Absolutely! The government might consider introducing tiered support systems that could provide more significant help for vulnerable groups or explore public-private partnerships to bolster funding for electric vehicle infrastructure. Expanding charging stations, incentivizing battery technology advancements, and promoting electric vehicle leasing could also encourage adoption without solely relying on direct subsidies.
Editor: Excellent insights, Dr. Dubois. As we wrap up, what key takeaway would you want to leave our readers with?
Dr. Dubois: I believe understanding the interplay between market incentives and consumer choices is critical. As we navigate these cuts, it’s essential for both consumers and manufacturers to advocate for policies that support sustainable mobility and make electric vehicles accessible for everyone.
Editor: Thank you, Dr. Dubois, for your valuable insights today. We will continue to monitor these developments in the French automotive market, and we appreciate your expertise.
Dr. Dubois: Thank you for having me. I hope to see a positive shift in discussions around these critical issues soon.
