Coronavirus: France announces €8bn rescue plan for vehicle industry

Cheryl Sanders
May 28, 2020

The coronavirus pandemic has hurt auto manufacturers around the world and France has been no exception, with confinement measures closing showrooms and prompting factories to suspend production.

This amounts to €5,000 for each company purchase and €2,000 per hybrid rechargeable auto.

It includes up to 12,000 euros, or about 13,000 dollars, in subsidies for consumers who scrap gasoline-powered vehicles produced more than 15 years ago to buy electric cars.

Mr Macron set a goal of producing one million electric cars in France by 2025. "It is indeed a plan for the future of the 21st-century automobile", the president said.

Macron also said that no auto model now made in France should be manufactured in other nations.

Renault will also lend its weight to the Battery Alliance, a pan-European industrial push to boost battery production and increase supply in check with growing demand for electric vehicles.

Starting June 1, there would also be an aid of 3,000 euros for converting from a petrol-fuelled auto to a less-polluting one - and as much as 5,000 euros to upgrade to an electric vehicle, the president said.

"The state will provide more than €8 billion in aid to the sector".

He will then visit supplier Valeo, which makes equipment for electric cars, at its factory in Etaples, in northern France, from where he will detail the rescueplan. Macron tweeted that the government's support for the national vehicle industry, which includes brands like Peugeot-Citroen and Renault as well as parts suppliers, will increase "massively". The French president also affirmed that to support the development of electric vehicles in France, 100,000 charging stations would be in operation throughout the country by 2021.

The McLaren Group on Tuesday said it would cut 1,200 jobs - a quarter of its workforce.

Renault is nearing an awarded a roughly $4.4 to $5.5 billion (€4 to €5 billion) credit line from the French government, and will become the third partner next to PSA and Total subsidiary Saft - in a multi-billion-dollar venture to manufacture electric vehicle batteries inside the European Union - as of writing, the lion's share come from South Korea and China.

Finance Minister Bruno Le Maire said Monday that carmakers must commit to bringing back manufacturing to France in exchange for the support, but unions are wary as the industry is in turmoil.

Both Renault and PSA are navigating hard straits. It reported its first loss in a decade in 2019 after a tumultuous year. It is in the process of merging with Fiat Chrysler Automobiles to create the world's fourth-largest auto maker. Would that make them the pandemic to be assigned?

The issue is politically sensitive, since France is proud of its auto industry, which employs 400,000 people in the country and is a big part of its manufacturing sector.

While releasing the plan, the French government also gave out a number of specific examples meant to show that environmentally-friendly vehicles are within the reach of working-class families. It has been in talks over a 5 billion euro loan guarantee.

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