In France, the entire automotive sector has been hit hard by this health and economic crisis. In April 2020, vehicle sales plunged 88% in France. There is talk of a supply and demand shock, as car dealerships are closed. Therefore, no customer can get there and production has been at a standstill since the last half of March 2020.
Now, let’s take a look at the plug-in electrified vehicle segment. The market also plunged, dropping 67% in April 2020.
Thus, the automotive sector, like tourism and others, will most certainly have to be revived by the public authorities. Each crisis has its opportunities, and that of Covid-19 is certainly an opportunity for a green recovery focused on the energy and ecological transition. Let’s take a look at that in detail.
What we know today
The public authorities are trying to react as quickly as possible so that this exit from the crisis may be as rapid and effective as possible.
The Directorate General for Energy and Climate directly decided to extend the 2019 ecological bonus (despite changes scheduled for March 2020) for any electric vehicle delivered before June 15, 2020.
For the longer term, the Minister of the Economy Bruno Le Maire seems to have understood this and would be working on a revival of the automotive sector mainly by encouraging the purchase of clean and rechargeable vehicles.
Finally, for consumers, despite the drop in fuel prices of around 20 cents since March, we must anticipate the future because this drop is only temporary.
What future ?
It’s AVERE-France and other major economic players who have taken the lead and who call for a relaunch focused on the electricity sector. According to AVERE, it is a “sector of excellence and a major axis in the reconquest of the country’s industrial technological sovereignty, electric mobility is able to respond to the economic and ecological challenges we face”. This crisis should in no way be a brake on the energy transition that has started. Investments in R&D and training must not stop so as not to nullify the work carried out by European manufacturers in recent years.
Before the COVID-19 crisis, the decline in aid planned for companies wishing to switch their fleets to electric did not bode well. Indeed, the fear of seeing the Total Cost of Ownership (TCO) becoming less attractive than that of combustion vehicles was very present. The revival of the automotive sector which could (and should) take place after the crisis would be a boon for these companies.
In its report, AVERE proposes to help companies to restore their liquidity through an incentive tax system: increase the depreciation of electric vehicles acquired in the year following confinement, VAT exemption for electric recharging services or the reestablishment of the ecological bonus of 6,000 € for companies. This bonus was intended to decrease and finally disappear in 2022.
These measures would encourage the switch to electric fleets and thus boost the electric segment of the automotive industry.
For more details, we invite you to read the AVERE-France article by clicking HERE.
A green recovery must concern all economic players. Individuals are increasingly concerned about the environmental future of the planet. This is what shows the consultation launched by WWF, the Red Cross and Meg.org, evoking the place of the environment and other subjects forthe idea of ” the next world “.
It seems that the government, and more particularly, Bruno Le Maire, are working on a revival by maintaining the ecological bonus and the conversion bonus, but also by adjusting the VAT according to the vehicle’s motorisation. Thus, electric vehicles would logically benefit from an advantageous VAT, unlike combustion vehicles. The crossover point between the curve for electric vehicles and that for combustion vehicles could thus arrive more quickly than expected.
Increase the number of charging points
Relaunching the automotive sector by relaunching rechargeable electric vehicles (EVs) is good. Supporting this relaunch by increasing the number of charging points is better. One of the challenges in the development of the electrified vehicle fleet is indeed to correlate EVs and charging points.
Il va avant tout falloir faciliter les démarches liées au droit à la prise en copropriété.Above all, it will be necessary to facilitate the procedures related to the right to co-ownership. The procedures can indeed seem long and therefore discouraging. Some people have been waiting for more than 2 years to complete their process. We will therefore have to identify the source of this problem in order to resolve it as quickly as possible and encourage the purchase of EVs for people in co-ownership.
In addition, AVERE-France offers to help the territories and operators who were the first to invest in charging equipment. The aim is to modernise their charging points so that they comply with the latest regulatory requirements.
Relaunching the automotive sector by encouraging energy and environmental transition seems entirely logical and coherent. The gray areas now lie in the actions that will have to be taken for this recovery to be most effective. Production (supply) has been stopped to avoid creating stocks and economic agents (demand) are suffering from the economic consequences of this crisis. Thus, supply should not have too much difficulty resuming, provided that demand is encouraged. In the hope that Keynes’ ideas will come to the rescue and give new impetus to the automotive sector.