France rejigs rules for EV aid, leaving out most China-made cars

France unveiled a list of EVs eligible for subsidies of as much as €7,000 ($7,640) per car that partly hinges on their environmental footprint and effectively excludes vehicles made in China.

“We will no longer subsidize vehicles that emit too much CO2,” Finance Minister Bruno Le Maire said in a statement. “Car manufacturers will be encouraged to decarbonize their production processes to gain access to the bonus.”

From tomorrow, France is offering the variable rebate based on household income on cars costing less that €47,000. The policy is a bid to boost local production of zero-emission vehicles and their components, and comes on the heels of the European Union’s probe into allegedly unfair subsidies for China’s burgeoning EV industry. 

The list of eligible vehicles includes Tesla Inc.’s Model Y made in Germany and premium vehicles by Mercedes-Benz Group AG and BMW AG. Cheaper China-made cars such Renault SA’s Dacia Spring and SAIC Motor Corp.’s MG 4 aren’t listed, nor is and BMW’s iX3 SUV. Tesla’s Model 3 that’s manufactured in China and the US isn’t either. 

Some of the cars will also be eligible for a government-sponsored leasing scheme, offering cars for as much as €150 a month for lower-income households. President Emmanuel Macron also said that the least well off French households will be able to lease electric cars for €100 a month with no down payment, making good on a presidential campaign pledge to make zero-emission cars more affordable. 

“We’ll produce more and more vehicles in France,” he said in a video published on Thursday on X, formerly known as Twitter. “The point is helping you choosing electric vehicles that were made at home.”

EVs made in China have a larger carbon footprint because of the country’s reliance on coal and logistics involved on getting them to Europe. 

France is confident its new rules comply with World Trade Organization rules on protectionism because they are justified as safeguarding the environment, a government adviser said before the publication of the list. 

The EU investigation, which began in September, has led to concerns of a potential tit-for-tat tariff war at a time when European leaders are seeking to boost economic independence without losing access to China’s massive market after trade deficits ballooned.

According to the government’s website, the list of EVs available for leasing includes the Peugeot e-2008, the Fiat 500e and the Renault Megane e-Tech, but excludes some of the cars eligible for the bonus.