Coronavirus: France sets out €8 billion rescue package for auto industry

Coronavirus: France sets out €8 billion rescue package for auto industry”

The French government is injecting more than 8 billion euros (US$8.8 billion) to save the auto industry from huge losses wrought by COVID-19 lockdowns, and wants to use the crisis to make the nation the No. 1 producer of electric vehicles in Europe.

The "historic" intervention will aim to turn France's electric auto industry into Europe's biggest, the president said Tuesday, as he visited supplier Valeo, which makes equipment for electric cars, at its factory in northern France.

Visiting a vehicle factory in Etaples in northern France, Macron said his government would seek to boost flagging customer demand with a subsidy of 7,000 euros for each individual buying an electric auto, 5,000 for each company purchase, and 2,000 per hybrid rechargeable vehicle.

Negotiations with the likes of Citroën, Peugeot and Renault have been ongoing for weeks and the €8 billion support package does not come without strings, as Macron has made it clear they are expected to do more domestically.

In France, 250,000 employees in the sector are on state-funded temporary lay-off and the industry has 400,000 unsold vehicles on hand, Macron said.

The government is under pressure to ensure carmakers commit to keep jobs in the country and Finance Minister Bruno Le Maire said Monday that companies would have to commit to bringing back manufacturing to France if they wanted support. He set a target of France producing a million green cars annually by 2025. France's big three marques have factories around the world to cater for different markets, and in Europe, facilities are located in Portugal, Slovakia, Spain, Turkey and more.

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Auto sales in France fell by about 90% in April compared with a year earlier as showrooms were shut and factories suspended production.

But Mr Macron mentioned the federal government wouldn't log out on the deal till Renault's administration and unions had concluded talks over the carmaker's French workforce and crops in France.

"We welcome the purchase incentive scheme which should promote the energy transition with aid meant to increase the market share of electrified vehicles and to accelerate the renewal of old vehicles with more virtuous vehicles". Renault and Peugeot owner PSA Group each planned to contribute EUR100 million to the fund. Paris offers to bet on electric vehicles.

Macron's €8bn scheme is also aimed at consumers, who will be able to benefit from new and improved subsidy schemes worth around €1bn. Hardly any new cars were sold in Europe last month as national lockdowns closed dealerships and plants. To boost demand, the aid scheme includes a limited scrappage programme.

The French government is setting aside more than €1.3 billion ($1.43 billion) for EV incentives, in a bid to bring down the price of battery-electric vehicles - by almost 40 percent in some cases, while also lowering Carbon dioxide emissions. The French president also affirmed that to support the development of electric vehicles in France, 100,000 charging stations would be in operation throughout the country by 2021.

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