France Ramps Up Electric Vehicle Ambition as Xi Arrives in Paris

(Bloomberg) -- The French government will sign a wide-ranging pact with the automotive industry on Monday that sets new targets for electric vehicle sales, just as Chinese President Xi Jinping arrives for a state visit clouded by trade tensions in the sector.

The contract between the government, French business groups and unions aims for a fourfold increase in the sale of 100% EVs to 800,000 a year in 2027. It also targets a sixfold increase for electric light commercial vehicles, to 100,000 a year. 

While there’s no explicit amount specified for new subsidies, the government will repeat pledges to continue with support for EV purchases and leases. The contract also has a chapter on “ensuring our sovereignty” that includes stress testing supply chains for critical materials.

The new “strategic sector contract” comes as France and other countries sound the alarm over the risk of over-capacity in China’s EV market submerging their own domestic industries. In the fall, the European Commission acted on those concerns by launching an investigation into China’s support for its EV sector.

Read more: Macron Calls For Reset of Economic Ties With China

“The auto industry is part of our industrial culture and this industry is facing a once-in-a-century change,” said French Finance Minister Bruno Le Maire. “The transition is difficult, with strong competition from other countries, in particular China, so we need solidarity in the sector.”

The EU-China tensions over EVs will be front and center of Xi’s two-day visit to France, where he’ll also meet with European Commission President Ursula von der Leyen. The tension has escalated into a broader spat, with Beijing launching a liquor dumping probe that could ultimately hurt French cognac makers in particular. 

France has taken its own action by restricting cash support for EV purchases to vehicles with the lowest carbon footprint in production — a move that de facto excludes many Chinese-made models. It’s also the first country to use new European rules to support the nascent battery industry with green tax credits.  

Later on Monday, Le Maire will address a Franco-China economic conference, where Xi and French President Emmanuel Macron are also due to speak. 

“Europe must adopt a trade policy that protects our industry, our jobs and our technology,” Le Maire said. “I decided to limit bonuses for EVs to cars that respect the strictest environmental norms, quite simply to enhance our production and confront competition that is tougher and tougher, if not ferocious.”

The wide-ranging accord signed on Monday will also include a framework for cooperation on innovation, retraining, bolstering the sector’s supply chain in France, and increasing the network of recharging stations.

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