France ends incentives on PHEVs while Luxembourg encourages drivers to switch

10 January 2018

France has ended its subsidies for plug-in hybrid electric vehicles (PHEVs) in line with anticipated changes to the country’s eMobility subsidy program.

The country is planning, along with the UK, to ban the sale of conventional petrol and diesel vehicles by 2040. When the announcement was made in July 2017, Environment and Energy minister Nicolas Hulot suggested that there would be some form of incentive offered, alongside current promotions that allow low-income families a €1,000 saving on low pollution vehicles, while expanding this current scheme beyond just hybrid and electric cars.

Cars and light commercial vehicles with a pure electric drive will continue to receive up to €6,000 from the state, while those looking to scrap a vehicle in the course of purchasing an electric vehicle (EV) can expect up to an extra €2,500.

However, the move to discontinue the PHEV incentives will take away consumers from what could be a stepping-stone between conventional engines and full electric drivetrains. The move will ensure that the country does not back itself into a corner relying on subsidies in this market at least, a position that Norway finds itself in with its entire EV market.

In preparation for the ban, the French Government also announced plans late last year to increase the tax on diesel fuel at the pumps by 10%, bringing parity with petrol prices in the country.

While France moves its incentive programs around, in Luxembourg, buyers of a hybrid vehicle emitting less carbon dioxide per kilometre can benefit from a tax rebate of up to €2,500. However, only a small number of vehicles are available for the incentive. The Toyota Prius, for example, emits 76 grams of CO2, meaning buyers should do their research before purchasing.

The subsidy is in addition to a €5,000 discount for the purchase of electric vehicles in 2017.

During the last 12 months, 2,480 hybrid vehicles were registered in the country, while just 533 EVs were on the roads. These are small numbers compared to the 52,776 diesel and petrol vehicles. However, the market share of alternatively fuelled vehicles is growing year by year. The state hopes that the introduction of incentives will boost these numbers.

To recharge the electric vehicles, Luxembourg plans to increase its charging station network to 800 terminals by 2020, each of which will be able to charge two vehicles. There are currently around 100 stations in the country, and these are spread out. There are only 22 in the north of Luxembourg, while in the east, there is only a handful.