France Reduces Funding for Electric Cars Made in Asia

author: FutureCar Staff    

France has introduced new subsidy criteria for electric vehicles, aiming to exclude cars made outside the EU starting from January 1st next year. The goal is to indirectly exclude Chinese carmakers, who have been rapidly increasing their market share in France with cheap models. However, this measure also affects all Asian manufacturers, including Korean EV makers.

The French Ministry of Economics and Finance announced that the new criteria will quantify the carbon emissions generated during the production and transportation of electric cars, based on their country of origin. This means that buyers of electric vehicles in France will no longer be eligible for a cash incentive of up to 5,000 euros if they choose Korean EVs.

One of the reasons for this exclusion is the significantly higher carbon emissions associated with Korean-made car chassis. For every 1 kg of aluminum, Korean car chassis produce 18.5 kg of carbon emissions, compared to 8.5 kg for cars from North America, 8.6 kg for cars from Europe, and 12.6 kg for cars from Japan.

Furthermore, the carbon emissions for key components of electric cars, such as batteries, are also higher for Korea compared to Europe, Japan, and China. Korea produces 63 kg of carbon emissions per kilowatt-hour, similar to Japan's 67 kg and China's 68 kg, while Europe produces 53 kg.

In addition, the carbon emissions associated with transporting finished cars to their destination are more disadvantageous for distant Asian countries. For example, in rail transport, Asian countries are assessed at 0.041 kg per ton per km, whereas France is rated at 0.01 kg and other European countries at 0.023 kg.

This new subsidy scheme has raised concerns among Korean carmakers, such as Hyundai, who sold 16,655 electric cars in France last year. However, only 40 percent of these cars were produced in Europe, with the rest likely to be excluded from the subsidy scheme. Korean carmakers are now planning to increase the proportion of electric-car production in their European factories, which currently stands at only seven percent.

The Ministry of Trade, Industry and Energy in Korea has stated that they will continue negotiations with the French side to minimize the burden on Korean companies. The Korea International Trade Association has also expressed deep concerns, warning that France's new subsidy scheme might violate free trade agreements between the two countries that prohibit discriminatory treatment.

FutureCar Staff