Editor’s Note: This article originally appeared on Mostafa Mostafa’s LinkedIn on June 2, 2020. Mostafa is an energy policy analyst researching country-level energy transition policies at the International Institute for Sustainable Development. Mostafa is an electrical engineer by background and has worked at ABB for several years.
Emanuel Macron announced plans to rescue the French automotive industry on May 26th. The aid package will amount to around EUR 8.8 bn. EUR 1.3. bn are set aside to make electric vehicles (EVs) more affordable. The French government is subsidizing buyers with up to EUR 12,000 to finance their new EV purchases. Alongside this recent promising development, there has been another avenue that was pursued by the country to support the transition to low-carbon transportation.
On April 3rd, the French government authorized the conversion of petrol and diesel vehicles into EVs. This is the first time an EU country adopts a decree of this kind.
According to the decree published in the “Official Journal of the French Republic”, owners of vehicles over 5 years old, two-wheelers and three-wheelers over 3 years old will be legally allowed to replace their internal combustion engine (ICE) with electric ones at their own cost. The legislation defines and outlines the clear processes and administrative requirements necessary for the reception and installation of components for converting vehicles with conventional – polluting – engines into electric motors and batteries. Establishing this infrastructure may encourage businesses, fleet owners and private owners – currently not planning on investing in new EVs – to convert their old vehicles.
This decision came at a time when many governments are reassessing policies to respond to COVID19 repercussions – particularly as the crisis entails an economic downturn that will affect many sectors, including the automobile sector.
The association responsible for conversions of ICE vehicles into electric in France, Acteurs de l’Industrie du Rétrofit électrique answered to the decree with a statement saying that:
“in this period of health and economic crisis linked to COVID-19, and in view of the unprecedented repercussions in the automotive sector, this is a positive sign for the revival of activity and the environment.”
The association also highlighted that this legislation supports a common-sense economy.
“It is good for our lungs, good for our jobs, good for recovery, good for our cities, our regions, France and the planet!”
Indeed, retrofitting of fuel vehicles not only makes electric mobility cost-efficient, and hence more accessible to the wider public, but also reduces the financial burden of subsidising EVs purchases. The high price of EVs has been a major hurdle in the transition to low-carbon transportation – partly addressed by the French automotive bailout package expiring by the end of 2020.
By converting fuel-based vehicles to EVs, the purchasing costs of EVs can be slashed by up to 50%, thereby reducing the government burden that consists of EV subsidies.
While in the past countries like Egypt and India have incentivized converting gasoline vehicles to compressed natural gas (CNG) through subsidizing the cost of conversion, today some countries like France are encouraging through EV-supported legislation to convert vehicles to electric to decarbonise their transportation sector. Retrofitting vehicles ranging from light-duty trucks to two-wheelers and three-wheelers in India, Uganda, and Nigeria is also becoming more common.
With oil prices dropping to historic lows, it is imperative for countries to ensure that their transport sector – both commercially and privately owned cars – is not locked in a carbon-heavy growth path. As governments design stimulus packages to restart their economies in the aftermath of the crisis, the step taken by the French government should be considered by other countries to align COVID-19 recovery with green energy transition.
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What can and should governments do to support the electric mobility evolution now?
- Offer financial support for electric mobility SMEs to survive the economic slow-down
- Encourage EV manufacturers to localize their production to reduce disruption risk in supply chains
- Adopt decrees to outline a clear conversion process for retrofitting ICE vehicles to EVs
- Accelerate national plans for electrified public transit and policies to encourage wider adoption of EVs
Many governments, some automotive industry companies, policymakers, and the wider public are voicing their belief that the future of mobility will most likely include a significant share of electric vehicles – for both drivers and public modes of transport. The revolution in battery storage technologies and the decline in the cost of lithium-ion batteries have enabled a faster rise of EVs in the automotive mix. Retrofitting holds the potential to accelerate the transition and create employment at a time when both are sorely needed. Governments should ensure that post-COVID-19 stimulus measures are contributing to getting the economy moving without setting back essential climate progress.
Acknowledgements to Aditya Pant (IISD, IHEID)
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