France Reduces Funding for Electric Vehicles from Asia

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【Summary】France has implemented new subsidy criteria for electric vehicles, aiming to exclude cars made outside the EU from receiving subsidies. This move indirectly affects all Asian manufacturers, including Korean EV makers, in an effort to freeze out Chinese carmakers. The new criteria quantifies carbon emissions generated during the production and transportation of electric cars, which puts Korean-made cars at a disadvantage due to higher emissions compared to North America, Europe, and Japan.

FutureCar Staff Sep 21, 2023 9:17 AM PT

France Reduces Funding for Electric Vehicles from Asia

France has implemented new subsidy criteria for electric vehicles, aiming to exclude cars made outside the EU starting from January 1st next year. This move is intended to indirectly exclude Chinese carmakers, who have been rapidly increasing their market share in France with their affordable models. However, the new criteria also affect all Asian manufacturers, including Korean EV makers.

The French Ministry of Economics and Finance announced that the new criteria will measure the carbon emissions produced during the production and transportation of electric cars, based on their country of origin. Korean-made car chassis, for example, have significantly higher carbon emissions compared to cars from North America, Europe, and Japan.

Not only are the carbon emissions of Korean-made car chassis higher, but the carbon emissions associated with key components of electric cars, such as batteries, are also higher for Korea compared to Europe. Additionally, the carbon emissions associated with transporting finished cars to their destination are more disadvantageous for distant Asian countries compared to France and other European countries.

According to French authorities, most electric cars produced in Asia, including those from China, are likely to be excluded from France's electric vehicle purchase subsidy scheme starting next year. This has raised concerns among Korean carmakers, such as Hyundai, who sold a significant number of electric cars in France last year. Hyundai plans to increase the proportion of electric-car production in their European factories to comply with the new subsidy criteria.

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 concerns, warning that France's new subsidy scheme may violate free trade agreements between the two countries that prohibit discriminatory treatment.