Global EV Transportation Review

Despite lacking a national-level target for zero emission transport, the country must meet European Union’s committed target of banning the new ICE sales by 2035. Various government measures stem from this fact. Subsidies have played an important role as a demand prop. But the government has lately been rationalizing the subsidy allocation. Since January 2023, a maximum €5,000 was fixed for electric passenger vehicle purchases. Earlier, the same was €6,000. The subsidy disbursement, carried out as part of the eco-bonus, was long expected for a gradual tapering.

The available subsidy support is restricted to the battery electric and fuel-cell vehicles with price of up to €47,000 and mass less than 2.4 tonnes. For the leased vehicles, the subsidy coverage is for 27% of the gross price together with the battery cost, within a ceiling of €5,000 for private use and €3,000 for companies. There is no vehicle price restriction in the case of electric vans – for a maximum weight of 3.5 tonnes, the subsidy covers 40% of gross price, with upper limits of €6,000 and €4,000 for private and commercial use respectively. Additionally, battery cost is included in subsidy calculation for leased electric vans.

The subsidy allocation also carries provisions for the low-income households. A maximum amount of €7,000 is available for the battery electric passenger vehicle purchase. For the electric vans, the same is €8,000. Also, the low-income households are allowed a subsidized purchase of used electric vehicles, at €1,000 or €3,000 depending on whether it is a passenger vehicle or van.
There are other incentives through the vehicle scrapping premium. With a certain income threshold, disposing an ICE vehicle during the purchase of the electric passenger transport, makes it eligible for a subsidy of up to €6,000. This is in addition to the rebates already entitled for purchasing the electric vehicle subject to fulfilment of criteria. The plug-in hybrid electric vehicles, in this case, qualify for up to €4,000 in subsidy support. For commercial purchases, the subsidy related to battery-based and plug-in hybrid is €2,500 and €1,000 respectively. In case of the vans, similar income thresholds hold, for subsidy covering 40% of the purchase costs, up to €9,000. In case of disadvantaged households, the upper limit extends to €10,000.

The subsidy regime for the heavy commercial vehicles follows a different approach. Disbursement is based on calls for projects. In 2022, the authorities had one such time-bound scheme, for which the subsidy support was released for specific project applications. For 2023, it will be a similar one. In this process, the expected subsidy support for the electric buses and trucks weighing up to 26 tonnes is €100,000. The previous funding rounds also had additional support for the associated charging system of the heavy commercial vehicles.

Policy-level funding support is also available to encourage charging infrastructure. Starting December 2022, a new scheme with budget of €10 million offers subsidy for installing fast-charging stations at independent petrol stations with annual sale volume of up to 2,500m3, and located in medium or rural density communes. The approved applications under this scheme would qualify for subsidy support ranging 60%-70% of the setup cost depending on rated capacity (50kW or 150kW). Separately, there are fiscal incentives for homeowners setting up their own charging stations. There is a tax break worth about 75% of the expenses incurred, up to €300.

Focus is also high on the critical raw materials and its supply chain to fulfill the targeted capacity base. Under the 2030 Investment Plan, the government dedicated €500 million to develop an investment fund that could support and sustain the domestic industrial landscape related to critical metals in the battery and electric vehicle value chain. Notably, in October 2022, the French minerals company Imerys announced plans to launch lithium production process at a tentative cost of €1 billion, with construction work expected to start from mid-2023. The planned production could be one of Europe’s largest such mining projects.

The automotive manufacturers meanwhile are stepping up the capacities to prepare for the demand. In October 2022 for instance, Stellantis announced its progress towards doubling the share of electric vehicles in its total vehicle output for French market. Another major entity, Renault is in the process of a massive expansion in its electric vehicle across three locations, to develop a hub of 400,000 units’ capacity by 2025. Notably, the same manufacturer has also been able to significantly ramp up the capacity in electric trucks, to corner a predominant share in the French and overall European market.

A steady expansion in the electric bus fleet, led by the municipal authorities’ procurement, is shaping the market contours for the global and regional players. In February 2022, the Dutch company Ebusco signed a Letter of Intent to set up a new manufacturing plant in France, with an initial capacity of 500 electric buses. An emerging major demand from the various cities and municipal authorities appears to be for converting the existing ICE platform buses to electric through retrofitting. Regulatory backing for the same comes from a government order in 2000, allowing retrofitting of vehicles aged five years or more, without permissions from the original manufacturer. About half of the existing operational fleet meets the retrofitting criterion.