French Tax on Inefficient Vehicles Riles Automakers

Matt Posky
by Matt Posky
french tax on inefficient vehicles riles automakers

Next year, the European Union plans to adopt aggressive new rules that would see automakers fined if their total annual vehicle sales exceed predetermined carbon limits. Obviously automakers aren’t thrilled with the new fines and higher emission mandates, but France is facing additional criticism for its decision to take things a step further.

France’s parliament has adopted a new law penalizing cars that emit carbon dioxide above a certain threshold while still adhering to EU regulations. Vehicles failing to adhere to the French rules will be subject to a 20,000 euros ($22,240) tax in 2020, nearly twice the current fine. Meanwhile, the country is mulling the possibility of culling EV incentives — an odd move, considering its aim to transition its populace to zero-emission vehicles.

As SUVs tend to be bigger polluters than, say, a city car that’s half their weight, they’re likely to be the most impacted by the new rules. According to Bloomberg, about one third of France’s new auto sales currently stem from crossovers and sporty utility models.

From Bloomberg:

The measures will impact SUV prices. SUVs are among the most polluting passenger vehicles because they are heavier and less fuel efficient. Despite this, they are popular, making up 30 percent of sales in France in the first 11 months, according to Paris-based consultancy Inovev. While electric-car sales are growing quickly, they still make up a tiny proportion of the overall market.

The measures have come under fire from the French industry.

“It’s a double penalty for consumers,” Luc Chatel, head of French automotive organization PFA, said in a statement, which called the policy “incoherent.”

“The electric-car market won’t take off without strong purchasing incentives,” Chatel said. “Everyone has something to lose: The industry, the environment and the purchasing power of the French.”

With more money coming in from models more prone to producing air pollution (via taxes), one would presume France could afford to continue subsidizing electric vehicles. Doing so isn’t cheap. It’s estimated that France’s EV subsidies cost the nation about 550 million euros last year. The French finance ministry figures its new SUV penalty could yield around 50 million euros in revenue per year in revenue, money that will apparently be used to help the automotive industry transition toward cleaner vehicles. But, as you can see, it is nowhere near enough to offset the cost of providing electric vehicle incentives.

Those subsidies will remain in place, undergoing some moderate changes. For 2020, France will offer as much as 6,000 euros toward the purchase of an electric car — so long as the vehicle costs less than 45,000 euros. This is being done to help reduce criticism that EV subsidies are basically a tax break for wealthy early adopters; the price cap is right on the edge of what a bare-bones Tesla Model 3 might cost in Europe.

That makes all of this a little more complicated than simply assuming France has no idea what it’s doing. Public sentiment increasingly frames EV subsidies as being anti-competitive, clogging the free market by propping up models chosen by the government — rather than consumers. France hopes to wean the public off EV subsidies by reducing the maximum payout over the next few years. Of course, it’s also praying they’ll be able to stand on their own by then.

Unfortunately, plenty of uncertainties persist. After 2030, European carmakers must achieve average vehicle emissions of just 59 grams of CO2 per kilometer (which translates to about 105 miles per gallon, if you’re driving a diesel) to avoid penalties. Many claim the rule basically forces automakers to shift away from internal combustion motors entirely. Gas burners probably cannot reach this target without customers making major sacrifices in terms of size, weight, and power. That leaves EVs, which burn their CO2 at battery/auto factories and power plants.

[Image: LanaElcova/Shutterstock]

Comments
Join the conversation
2 of 121 comments
  • Roader Roader on Dec 31, 2019

    With the amount of money many cities (aside from the old, very dense cities like NYC and downtown Chicago) spend on light rail, we could buy Lyft or Uber rides for all those "physically and mentally disabled people with no income; and the kids who are too young to drive, and the seniors who are too old, and the students and low-wage workers who are too poor"... ...and still emit less CO2. Don't be daft.

  • Jeff S Jeff S on Dec 31, 2019

    The French Government has to put a heavy tax on any vehicle not made in France to get their own people to buy their terrible cars. French are not known for making dependable and reliable cars. The only cars that are comparable to the quality of the French cars are the Vega, Yugo, and Fiat.

  • Wjtinfwb Over the years I've owned 3, one LH (a Concorde) a Gen 1 300 and a Gen 2 300C "John Varvatos". The Concorde was a very nice car for the time with immense room inside and decent power from the DOHC 3.5L. But quality was awful, it spent more time in the shop than the driveway. It gave way to a Gen 1 300, OK but the V6 was underwhelming in this car compared to the Concorde but did it's job. The Gen 1's letdown was the awful interior with acres of plastic, leather that did it's best imitation of vinyl and a featureless dashboard that looked lifted from a cheaper car. My last one was a '14 300C John Varvatos with the Pentastar. Great car, sufficient power and exceptional highway mileage. The interior was much better than the original as well. It was felled by a defective instrument cluster that took over 90 days to fix and was ultimately lemon law' d back to FCA. I'd love one of the 392 powered final edition 300s but understand they're already sold out and if I had an extra 60k available, would likely choose a CPO BMW 540i for comparable money.
  • Dukeisduke Thanks Cary. Folks need to make sure they buy the correct antifreeze, since there are some many OEM-specific ones out there (Dex-Cool, Ford gold, Toyota red and pink, etc.).And sorry to hear about your family situation - my wife and I have been dealing with her 88-yo mom, moving her into independent senior living, selling her house, etc. It's a lot to deal with.
  • FreedMike Always lusted after that first-gen 300 - particularly the "Heritage Edition," which had special 300 badging and a translucent plastic steering wheel (ala the '50s and '60s "letter cars").
  • Dave M. Although the effective takeover by Daimler is pooped upon, this is one they got right. I wasn't a fan of the LHs, mostly due to reported mechanical, NVH and build quality issues, but I though Chrysler hit it out of the park with the LXs. The other hyped release that year was the Ford Five Hundred, which, while a well-built car with superior interior space, couldn't hold a candle to the 300.
  • Art Vandelay I always liked those last FWD 300's. Been ages since I've seen one on the road though. Lots of time in the RWD ones as rentals. No complaints whatsoever.
Next