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France is reducing bonuses for electric vehicle (EV) purchases for the wealthier half of households as it looks to rein in spending and keep incentives for the lower-income buyers.
In a decree on Tuesday, France cuts the so-called ecological bonus for EV purchases for the wealthier 50% of households by $1,073 (1,000 euros).
“There are two types of aid – for the poorest 50% of French people the bonus remains at 7,000 euros. For the richest 50% of French people, the bonus is now reduced from 5,000 euros to 4,000 euros,” Environmental Transition Minister Christophe Bechu told franceinfo radio today.
The idea behind the bonus cut for wealthier buyers – based on their incomes – is to “recalibrate” the targeted assistance for EV purchases.
France is also mindful not to overspend the $1.6 billion (1.5 billion euros) it had earmarked for incentives for EV purchases amid higher total public spending.
The French government is also suspending a subsidized EV leasing program, in which it wanted to subsidize lower-income citizens leasing an EV. Those plans were suspended on Monday for the rest of the year as demand for the program with 50,000 requests far exceeded the government budget for 20,000 EV leasing subsidies.
France’s cut to EV subsidies follows a much more drastic move by Europe’s biggest economy, Germany, which outright ended its EV subsidy program in December amid a budget crisis. Germany’s funds to help its energy transition were strained by a recent ruling of the Federal Constitutional Court. The top court ruled in November 2023 that the government’s plans to transfer $64.3 billion (60 billion euros) from unused emergency COVID funding to Germany’s new Energy and Climate Fund is unconstitutional and the climate fund should be reduced by that amount.
As a result of the end of subsidies, Germany’s EV sales plunged by 47.6% in December 2023 compared to a year earlier, dragging the EU’s new battery-electric car sales to the first decline since April 2020, during the pandemic’s peak, according to data from the European Automobile Manufacturers’ Association, ACEA.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com