Can Tesla be excluded from the ecological bonus?

While Tesla and Chinese manufacturers revel in the French eco-bonus served on a silver platter, European manufacturers are getting annoyed.

Elon Musk always seems to be one step ahead. The price reductions made by Tesla in January and then in April have boosted sales of the American automaker. In addition to offering an increasingly attractive value/benefit/price ratio, by lowering the starting price of several of its models below 47,000 Euros, Tesla also made them eligible for the 5,000 Euro eco-bonus. These are still very high-end vehicles, not entry-level models for green mobility.

The goal of this government aid is to promote the acquisition of zero-emission vehicles. Tesla is therefore entirely justified in benefiting from it, but this increase in sales can only come at the expense of other manufacturers, including France’s flagship brands. A strict application of the scheme runs counter to economic patriotism, but can it be otherwise?

The United States did not hesitate to roll out the Inflation Reduction Act (IRA) at the beginning of the year, a $370 billion plan aimed at promoting eco-friendly investments made in the USA, such as… Tesla cars. And what about the right to free competition? We’ll see that later; the priority lies elsewhere. We will not dwell on the unilateral customs duties imposed by China, which remain among the highest despite the drastic reduction granted in July 2018. In France, these low-cost vehicles from the Middle Kingdom are also welcomed with a generous eco-bonus rather than taxes.

Emmanuel Macron continues to advocate for protectionism at the European level, as the only way to give it a legal framework. But introducing a criterion based on European manufacturing for the bonus would exclude models like the Dacia Spring, manufactured outside Europe. That is the crux of protectionism’s complexity. Inevitably, we will soon see a new lower threshold for awarding the bonus or its conditionality based on income criteria, but this will inevitably benefit Asian low-cost manufacturers.

The French government’s initial work on green industry has just been completed. Several proposals outlining the contours of the upcoming bill have been issued ahead of its presentation this summer before the National Assembly. Behind the promising message about supporting industry in decarbonization programs, the core issue is the competitiveness of the French industry. The titles of two of the four major initiatives leave no doubt: “Transform taxation to grow the green industry” and “Produce, order, and buy in France“.

It remains to be seen whether this good intention can lead to effective solutions for French manufacturers, as Tesla still has many profitable months ahead.

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