Since price is still the major obstacle to purchasing an electric vehicle, all eyes are on the evolution of state financial aid. And it is likely to decrease. If Michel Barnier’s future government follows the cuts recommended by his predecessor in the framework letter sent by Matignon to the Ministry of Ecological Transition, the overall envelope devoted to greening the vehicle fleet should be reduced from 1.5 billion to 1 billion euros. Nothing has been written, however, on how this will materialize for consumers, while several hypotheses have been studied. A new reduction in the ecological bonus? A limitation on the number of social leasing applications? Or an ecological bonus from which the richest 20% would be excluded?
“Start sales”
Since its creation in 2007, the ecological bonus has evolved a lot and has gradually been geared towards electric cars. François Hollande made it sail from 7,000 to 6,000 euros for the latter before Emmanuel Macron raised it to 7,000 euros, until the end of 2021. But it has since melted by 1,000 euros each year before falling to 4,000 euros, since the beginning of 2024, except for the less wealthy, who are still entitled to an increased bonus of 7,000 euros. A single person paid 1,600 euros per month, just above the threshold, can be excluded from the increased bonus and therefore, in fact, from the possibility of buying a new electric vehicle, the price of which varies between 25,000 and 35,000 for the least expensive models.
The government now prefers to focus on social leasing. And while it has fulfilled its mission, by allowing working-class and, above all, lower-middle-class households to access 100% electric vehicles, the aid dedicated to this system is very costly (13,000 euros per vehicle) and only concerned 50,000 applications in 2024. Compared to the 1.78 million new passenger cars sold in 2023 and the 5.3 million used models, all engines combined. Bercy justified the gradual reduction in the ecological bonus at the turn of 2023, arguing that the purpose of this aid was a way “to initiate sales”, that it was therefore destined to fade, especially for the less wealthy. “The French vehicle fleet greening budget of 1.5 billion euros is increasingly targeted towards the poorest households, Bercy then specified. This is how public aid is most effective in triggering the act of purchasing an electric car.” The Ministry of Economy boasted of maintaining the amount of the overall envelope, which ultimately risks falling by 500 million a year later.
Windfall effect for industrialists
Above all, the targeting of aid towards the less well-off, if it is driven by a noble reflection towards fairness and budgetary efficiency, on the other hand questions the climate emergency, which requires the transition to 100% electric as quickly as possible. According to figures from the Ministry of Ecological Transition, only 11% of households earning less than 30,620 euros per year have chosen a new electric car in 2022, while those earning more than 62,250 euros were 25.5%. The case of Norway, whose GDP per capita is among the highest in the OECD, is eloquent: 82% of new cars sold in 2023 were electric, with a target of 100% in 2025. The OECD assures us: “Norway’s success in promoting electric vehicles is mainly due to generous tax incentives.”
But aren’t purchasing subsidies also a windfall for manufacturers? When the ecological bonus ended in early 2024 for cars assembled in China, the manufacturers concerned adjusted their prices, with those of the MG 4 and the Tesla Model 3 dropping by several thousand euros in the weeks that followed. As an illustration of the fact that subsidies are not the only indicator for the transition to less polluting cars.
