French IRA Backlash... "Asian Electric Vehicles Likely to Be Excluded from Subsidies"

As the French government pushes for a reform of electric vehicle (EV) subsidies, most EVs produced in Asia are expected to be excluded from the so-called "French version of the Inflation Reduction Act (IRA)" EV subsidy program. This move is widely interpreted as a measure aimed at curbing imports of Chinese EVs.

Da. Emmanuel Macron, President of France

According to the U.S. political media outlet Politico on the 18th (local time), a French government official stated that the French government plans to announce the detailed implementation rules for the subsidy reform, including new criteria for EV subsidies, on the 19th. The French government also intends to release a list of vehicle models deemed eligible under the new subsidy criteria around mid-December.

The official said that while some Asian-made EVs will receive subsidies, "according to our modeling, the majority of Asian-made EVs will not qualify," adding, "vehicles produced in countries with highly carbon-intensive energy mixes will find it difficult to maintain subsidy eligibility."

Earlier in May, the French government unveiled the "Green Industry Bill," which outlines the direction for EV subsidy reform in response to the U.S. IRA and other measures. French President Emmanuel Macron emphasized when unveiling the bill that it is necessary to stop using French taxpayers' money to subsidize EVs produced outside the European Union (EU).

Under the reform plan, consumers purchasing EVs will be eligible for subsidies of up to 7,000 euros (approximately 9.91 million KRW) per vehicle for low-income groups, and up to 5,000 euros for other consumers.

Eligibility for subsidies will be evaluated by the French Environment and Energy Management Agency (ADEME), which will assign an "environmental score" reflecting the carbon footprint of the entire process from production to transportation to France for each vehicle model. French government officials claim that this subsidy reform plan complies with World Trade Organization (WTO) regulations.

However, this measure is likely to disadvantage not only Chinese-made EVs but also Korean-made EVs, which face long transportation distances from production sites to local markets. Korean EVs are relatively disadvantaged in terms of subsidies because, compared to Europe, they rely more heavily on fossil fuel energy, and the carbon emissions generated during long-distance shipping, such as maritime transport to Europe, will also be factored into the evaluation.

Hyundai Motor Company and Kia, whose Kona, Niro, and Soul EVs have received subsidies in the French market and sold 16,570 EVs last year, ranking fifth in market share, are concerned about potential impacts from this reform.

This content was produced with the assistance of AI translation services.