France cuts EV subsidy for higher-income buyers

PARIS: The French government today cut by 20% a subsidy higher-income car buyers can get for purchasing electric and hybrid vehicles in order to keep from overrunning its budget to boost the number of electric cars on the road.

A government regulation lowered the subsidy from 5,000 euros (RM26,000) to 4,000 (RM21,000) for the 50% highest-income car buyers, but left the subsidy for people on lower incomes at 7,000 euros (RM36,000).

"We are modifying the programme to help more people but with less money," Environmental Transition Minister Christophe Bechu said on franceinfo radio.

Like many other governments, France has offered various incentives to buy electric vehicles, but also wants to ensure it does not overshoot its 1.5 billion euro (RM7.7bil) budget for the purpose at a time when its overall public spending targets are at risk.

Meanwhile, subsidies for purchasing electric company cars are being axed as are handouts for buying new internal combustion engine cars to replace older more polluting vehicles.

While the government's purchase subsidy is getting reined in, many regional governments continue to offer additional EV handouts, which in the example of the Paris area can range from 2,250 to 9,000 euros (RM46,294) depending on a person's income.

The latest move comes after the government halted on Monday for the rest of the year a new programme to subside low earners leasing an electric car after demand far exceeded initial plans.

France is not alone in curbing subsidies for electric cars as Germany prematurely ended its programme in December after the government was forced to revise its budget due to a constitutional court ruling affecting green transition spending.