France will gradually cut hybrid and electric-car subsidies in the coming years, posing a risk to the segment that’s growing but still remains a relatively small portion of the market.
The government plans to decrease an incentive to buy electric cars from 7,000 euros ($8,160) this year, to 6,000 euros next year and 5,000 euros in 2022, according to a budget plan unveiled Monday by Finance Minister Bruno Le Maire. The state handout for hybrid rechargeable vehicles will be halved to 1,000 euros next year.
(Also read: This French town goes 100 per cent electric with Renault Zoe for all residents)
A separate incentive for low-income households switching to electric vehicles will be pegged at 3,000 euros, lower than the cash-for-clunkers subsidy that was offered for a couple of months earlier this year.
“We have backed the auto industry while at the same time accelerated the lowering of carbon emissions," Le Maire said.
(Also read: France and Germany lap up electric cars as subsidies make them 'almost free')
Electric vehicles made up 6.1% of the French market during the first eight months of the year, according to data from the industry group CCAF industry group, up from 1.9% in 2019. Rechargeable hybrids are also capturing a growing market share.
Government incentives in some European countries including France and Germany helped boost car sales earlier this year after lockdown measures to contain the coronavirus sent purchases into a tailspin. The French state’s policies on subsidies particularly affect Renault SA and PSA Group, which rely on the domestic market.
This story has been published from a wire agency feed without modifications to the text.