The French government has lowered electric vehicle subsidy for higher-income car buyers in order to avoid overrunning its budget to boost the number of electric cars on the road. A government regulation has lowered the subsidy by 20% for this category from 5,000 euros (USD 5,386) to 4,000 for the 50% highest-income car buyers. However, subsidy for people on lower incomes has been kept unchanged at 7,000 euros.
The French government has been actively offering incentives to accelerate adoption of electric vehicles, just like many other governments. However, the country also wants to ensure that it does not overshoot its 1.5 billion euro budget for the purpose at a time when its overall public spending targets are at risk. “We are modifying the programme to help more people but with less money,” Environmental Transition Minister Christophe Bechu said on franceinfo radio, Reuters reported.
Simultaneously, subsidies for purchasing electric company cars as well as handouts for buying new internal combustion engine cars to replace older more polluting vehicles are being axed. 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 depending on a person’s income.
The latest move comes after the government recently halted a new programme to subside low earners leasing an electric car after demand far exceeded initial plans, for the rest of the year. 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.