Decrease in the 2025 ecological bonus, China says thank you!

The 2025 ecological bonus reduction on electric cars is a boon for Chinese manufacturers thanks to pricing alignment.

There will be at least two side effects of the reduction of the ecological bonus in 2025, from 4000 to 2000 euros, for the purchase of an electric vehicle. The first will obviously be a decline in sales, and therefore a slowdown in the renewal of the thermal vehicle fleet with decarbonized vehicles. This will have a heavy impact on the European automotive industry, which has been asked by governments to make huge industrial efforts… only to see sluggish sales in the end.

In Germany, the disappearance of the ecological bonus in 2024 was accompanied by a 50% collapse in sales despite domestic manufacturers being at the forefront in this electric sector. In France, the decrease is expected to be less severe since the bonus is not being abolished entirely, but still significant.

Alignment of Chinese prices

The second effect will be even more damaging to the industry, as the barrier France erected against Chinese vehicles will almost disappear. The 4000 euros of bonus, or even 7000 euros for the most modest households, guided purchases towards Made in Europe. That will no longer be the case, as China has waited, convinced that the bonus would be cut back.

This has now been done, and the true commercial face of Chinese manufacturers will come to light. Indeed, this measure disrupts the price structure between European models, traditionally more expensive, and Chinese vehicles, known for their good value for money.

Until now, the ecological bonus played a balancing role in the market, making European models more accessible to consumers despite their high cost. For example, a European compact electric car costing around 40,000 euros could effectively be around 36,000 euros. With the reduction of the bonus, that same car will now cost 38,000 euros, bringing its price closer to Chinese models often offered under 35,000 euros.

This price alignment will favor Chinese manufacturers such as BYD, MG, or XPENG, whose models directly compete with European brands, not only on price but also on features like range, technological equipment, and design. Consumers, more sensitive than ever to their budget in an inflationary context, are likely to turn to these less expensive alternatives without feeling they are sacrificing quality or performance. The mobile phone industry, 20 years ago, was an example of this. And since cars are now equated to smartphones on wheels, the scenario is predictable…

READ ALSO: The 4,000 Euro Ecological Bonus is Dead as of Today!