The French commercial and industrial automotive problem is not Chinese but European

The week of the Motor Show was one of interaction between the French political world and the two manufacturers. At a time when the latter must manage, without having the choice of technologies, a very rapid decarbonisation of the vehicles they market, public support is there. It is not surprising and rather legitimate in this context that a form of national preference should be requested if it cannot be demanded. In the European context, however, it is only possible to make support conditional on production in the EU. This may not be sufficient.

As could be expected, the Motor Show, deserted by many major brands, was not attended by Chinese manufacturers. This led Carlos Tavares and others to express a fear, that of seeing the automobile market, which has become electric by political decision, handed over on a platter to Chinese manufacturers and brands.

This fear, whether real or feigned, expresses a more general feeling in a large part of the automotive world, which consists of reproaching politicians for naively allowing themselves to be convinced by a fantastical plot that would have brought together Beijing, the ecologists - whom they like to call the "green Khmers" - and the urban bobos who vote for them, and a major part of the Brussels technocracy and the large European States.

The latter, ignorant of commercial, industrial and technological realities, used the VW affair and the media noise that surrounded it to silence the manufacturers and representatives of the sector and to impose on them, in the space of a few years, a series of decisions which, when viewed from the perspective of our own in 2015, seemed absolutely untenable.

The former, knowing perfectly well these realities, would have carried out their plan which consists, thanks to the electric vehicle, in firstly regaining control of their market and secondly challenging the supremacy of the large European, American, Japanese or Korean companies elsewhere in the world.

Without explicitly subscribing to this way of seeing things, which is generally that of the "anti-EV", the representatives of the presidential majority and, in particular, Bruno Le Maire and Emmanuel Macron seemed very attentive to the commercial and sovereignty issues associated with the rise of the Chinese automobile industry. They emphasised that our Chinese and American partners do not hesitate to invoke the defence of their sovereignty in order to distribute aid to the industry and aid for battery electric vehicles (BEVs). They have come up with the idea that it might be appropriate to stop being the butt of the free-trade joke and to have this kind of audacity in our turn by reserving our purchase subsidies for 'European-made' vehicles.

This is the problem: in the automobile sector, we have a growing gap between what we consume, including French brands, and what we produce. This gap is not linked to massive imports of vehicles from China or India but is mainly associated with relocations within the European area - to which Turkey and Morocco belong in the production organisation of Renault and Stellantis. Consequently, in the case of electric vehicles as in the case of combustion vehicles, playing the 'European preference' is far from being a guarantee against the deindustrialisation of France.

To defend this statement, we can first look at the 'hit parades' that Autoactu provides us with every month. If we take the "top 25" in petrol, we will be interested in 302,000 registrations over the first nine months of 2022, 85% of which will be in segments A and B. The 308, 3008, 5008 and Mokka are assembled in France, representing 29,000 vehicles. The Top 5, consisting of the Sandero and Clio (55,000 registrations) for Renault and the 208, C3 and 2008 (101,000), are 100% imported.

If we take the "top 25" BEVs, we have 128,000 registrations and the top 5 is also entirely composed of vehicles from segments A and B. The French assembly concerns the Zoe (5th with 10,634 registrations), the Megane (7th, 9,154) and the Mokka (18th, 1,834). There are certainly two vehicles imported from China (the Dacia Spring, 2nd, 13,022 and the MG ZS, 16th, 2,060) and two Tesla (Model 3, 6th, 10,265 and Model Y, 8th, 5,974), but, speaking only of the Renault and Stellantis brands, the imports of the 208, Fiat 500, Renault Twingo and Peugeot 2008 are European.

If, in a second step, we look at the foreign trade statistics of BEVs, then it emerges that, until this summer, our exports have plateaued or even fallen, at around 80,000 vehicles and 1.6 billion euros, which corresponded to slightly higher unit values of exported vehicles above 20,000 euros. On the other hand, our imports have increased between 2019 and June 2022 from 33,850 vehicles to 161,585 and from 0.94 billion euros to 3.9 (24,030 euros in unit value).

Our electricity deficit is therefore increasing very rapidly: it was 0.5 billion euros in 2020 and already exceeded 2.2 billion in June. This deficit is less 'European' than the general deficit that we are recording on the automotive sector since our deficit with Europe is only 0.8 billion and is equivalent to our 'Tesla deficit' and slightly less than our deficits with Korea and China.

From South Korea we import 11,000 BEVs for 348 million euros and from China 34,000 BEVs for 400 million. From Slovakia and Spain, the volumes imported are between 18,000 and 20,000 BEVs and the amounts are close to half a billion euros.

As can be seen from the question of gigafactories or the European location of Tesla in Berlin, this significant non-EU trade is not destined to last, as the importance of the European market eventually justifies productive investments close to the market. The question then becomes how the EU (and the EIB) intends to welcome non-European investments in Europe.

With regard to Tesla, the question has not even been asked. It will obviously be of major importance to ask it of companies such as SAIC, BYD or Great Wall, which are welcomed with open arms by European distributors and will also be welcomed by the new EU Member States, which will see no more reason not to offer them favourable conditions than they did a little over ten years ago to allow the development of Japanese and - above all - Korean manufacturers in Europe. At this level already, "European solidarity" will be very difficult to maintain, as it is clear that the overcapacities created are more of a problem for the old factories in high-wage countries than for the new ones in the new Member States.

Thus, from the point of view of French employees and the automotive territories, it seems essential to change the European doctrine and to avoid treating Chinese automotive investment in Europe in the same way as Korean investments were treated a few years ago. In the same way that Brussels considers that it is normal, even desirable, to manage the backlog via the IPCEI (Important Projects of Common European Interest) and to provide a subsidised catch-up period, this time we could consider that the ecological transition should be planned and that we should strive to avoid both overcapacity and the resolution of the affordability issue by continuing to relocate to low-wage countries.

This movement is beginning in France around Electricity since, considering that the equations are no longer 'at all' the same when it comes to assembling small electric vehicles as they were when it came to the same thermal vehicles, Renault is revising its intra-European arbitrations and is not going to assemble its R5 and 4L in Bursa or Novo Mesto but in Douai and Maubeuge. This movement is finally identified and explicitly indicated as essential by the French authorities in their dialogue with Carlos Tavares.

Thus, while Carlos Tavares announced that, in addition to Poissy already at work on the DS3 E-Tense and Mokka, we would soon see Mulhouse, Sochaux and Rennes in charge of assembling electric models of the Peugeot, Citroën and DS brands in the C segment, Bruno Le Maire had the audacity to mention the 208 case.
He is quite right to do so because France has every interest in doing everything possible to ensure that the fight for the accessibility of the electric vehicle, for which, in France as in Europe, our brands - and Fiat - have the legitimacy, is considered to be much more crucial than the fight for an upmarket range which, when it has been sought, has only given the French accessory cars.

The French manufacturers are not absent from the C and have and will have some brilliant results, but it is obviously in their interest to place the match where their market is and where in France and Europe the legitimacy of their brands is greatest. By the end of 2022, Stellantis will have obtained purchase subsidies from France for about sixty thousand electric vehicles sold, of which less than 5,000 will have been assembled in France. Its competitor certainly imports its Spring from China and its Twingo from Slovenia, but Douai will not only host the Megane and will make the French site the heart of its battle for the accessible BEV. If the 208 were to follow the same path, it would look very different...

24/10/2022