French president Emmanuel Macron has announced France will seek to jump-start the local auto industry decimated by the Coronavirus pandemic with an €8 billion ($A13.2 billion) plan that includes a major boost for electric vehicles.

Speaking at a press event in northern France on the site of an auto parts factory, Macron said the French government wants France to take a leading role in the European EV market.

“We need a motivational goal: Make France Europe’s top producer of clean vehicles by bringing output to more than 1 million electric and hybrid cars per year over the next five years,” Macron was quoted as saying by Automotive News Europe.

The multi-billion dollar plan will include raising France’s electric vehicle subsidy from €6,000 ($A9,910) to €7,000 ($A11,560) for private vehicle owners from June 1 to December 31, 2020.

Commercial fleets would be able to access a €5,000 ($A8,260) subsidy while plug-in hybrid vehicles would attract a €2,000 ($A3,300) subsidy if they have an all-electric range of at least 50km and do not cost more than €50,000 ( ($A82,600).

The subsidies would be available for the first 200,000 vehicles bought under the scheme.

In addition to the purchase incentive, France will also revisit incentives to scrap old, polluting vehicles that could see French drivers receive €12,000 ($A19,810) worth of incentives if they both scrap a vehicle and buy a new all-electric vehicle.

The new measures to encourage the transition to electric vehicles could prove exceedingly popular.

When a €2,500 ($A4,127) incentive to scrap dirty vehicles was originally introduced in 2018 in order to help France meet its Paris emissions targets, 45% of the original 100,000 unit allocation was taken up between January and May.

Like many auto industries across the world, France saw a steep decline in auto sales in March and April culminating in a 90% drop in sales.

However, as in many other regions, plug-in sales (both all-electric and plug-in hybrid vehicles) suffered less, with a 66% drop (-62% for all-electric sales only).

France’s big three auto brands – Renault, Citroen and Peugeot – all sell plug-in models in France, with the Renault Zoe the most sold plug-in vehicle to date for 2020, followed by the Peugeot 208 EV – in fact, both outrank the effervescent Tesla Model 3.

As part of the plan to boost France’s electric vehicle industry, Renault-Nissan will partner with Peugeot and Citroen parent company PSA as well as French utility group Total to make electric vehicle batteries.

Renault will also move development of a 100kW electric motor that it had slated for Asia to its factory in Cleon, France, Automotive News Europe reported, while PSA would produce an all-electric 3008 compact SUV in Sochaux.

PSA has welcomed Macron’s plan to focus on electric vehicles.

“The plan presented by the President of the French republic fits perfectly with the movement initiated by Groupe PSA in its daily fight against global warming, accompanied by substantial investments to locate the electrification value chain in France,” Carlos Tavares, chairman of the management board at Groupe PSA, said in a statement.

“We welcome the purchase incentive scheme which should promote the energy transition with aid intended to increase the market share of electrified vehicles and to accelerate the renewal of old vehicles with more virtuous vehicles.”

To recover from the Coronavirus pandemic, Renault has applied for a €5 billion ($A8.26 billion) loan from the French government.

On Thursday the struggling car maker convened a meeting to discuss how to cut €2 billion ($3.3 billion) in operating costs, a move that is expected to include factory closures and ensuing job losses.

Article by Birdie Schmidt

The Driven