France sets EV output target in $35B industrial plan

PARIS -- French President Emmanuel Macron unveiled a 30 billion euro ($35 billion) plan to reverse years of industrial decline in the EU’s second-largest economy, including 4 billion euros for the transport sector to support electrified vehicles and other initiatives.

The plan presented Tuesday, called "France 2030," would invest the money over five years in sectors including renewable energy sources, electric vehicles, semiconductors and robotics.

"I want us to look ahead and see our weaknesses and strengths,” Macron said in a speech at the Elysee Palace. “We need the country to produce more.”

Macron said the government would continue to support the automotive industry's transition to electrification, and he set a domestic production target of 2 million full-electric and hybrid vehicles by 2030.

“We need an industrial response to the challenge of the new mode of transport,” he said, adding that it was important to produce low-emission vehicles in France if the country wanted to have a clean vehicle fleet. 

Among recent initiatives, Renault has set up an electric-vehicle production hub in northern France, and Stellantis has a battery-cell joint venture with Total that aims to build a gigafactory in France.

“We need to focus on disruptive innovation technologies on new vehicles,” Macron said, citing three battery gigafactories planned for France.

The French government has been among the most generous in Europe in offering incentives for electric and hybrid vehicles. Under an 8 billion euro support measure put in place during the COVID-19 pandemic in May 2020, buyers could get more than 10,000 euros off the price of a new full-electric car. 

France will also spend 6 billion euros to support electronics production and innovation, including semiconductors, Macron said. 

France 2030 is the latest in the country’s long history of pumping public money into a hoped-for industrial renaissance. After the global financial crisis following the collapse of Lehman Brothers in 2008, then-President Nicolas Sarkozy launched a 35-billion future investment program, which has been replenished three times. 

Macron said his plan would take greater risks and not rely on well-established industrial firms. Half of the money will go to small companies, with a pledge to be green. If projects fail, the funds will quickly be reallocated, Macron said.

Despite the various efforts by successive governments, the share of industry in the French economy has declined almost without interruption and France hasn’t recorded a goods trade surplus since 2002. Six months before the presidential election, Macron is under pressure to show he can reverse those fortunes, particularly in former industrial heartlands, where he struggled to win votes in 2017.  

Macron said he wants to create “a virtuous cycle -- innovate, produce, export -- to finance our social model.”

The France 2030 plan includes:

• 8 billion euros for nuclear, hydrogen and renewable energy, including to build a new small nuclear reactor
• 4 billion euros for transport and mobility, with a target to produce 2 million electric and hybrid vehicles and the first low-emission aircraft
• 1.5 billion euros for food and agriculture
• 1.5 billion euros for moonshot projects such as virtual reality, cultural production, seabed exploration
• 6 billion euros for robotics
• 2 billion in training for booming sectors
• 5 billion euros to support industrial startups

The initiative comes only a year after the 100 billion euro “France Relaunch” program, which also aimed to go beyond crisis spending to address the country’s longer-term problems of low investment and hiring. By the government’s own expectations, there will still be around a third of that program unspent at the end of this year. 

The investment plans are in keeping with French industrial policy, but increasingly put Macron out on a limb in Europe, where other countries have begun talking about the need to return to some form of fiscal discipline after crisis-spending inflated deficits during COVID-19. The three broad objectives of France 2030 are to building small reactors in France becoming the leader of green hydrogen, and “decarbonizing” French industry.