Macron is imposing a shift to electric cars with a ferocious €90k Porsche tax

Yahoo

06-02-2025

France is all but prohibiting the sale of over-powered, gas-guzzling SUVs and cars. It is taking full aim at over-sized hunks of heavy metal on wheels, even if electric.
Status vehicles will become unaffordable unless you are seriously rich. But to flaunt wealth in France carries its own stigma, and its own risks. Setting fire to such cars is a relished rite on the eve of Saint Sylvester.
If you think Britain's ZEV mandate is tough, note the astonishing tariff tucked away in the text of the new French budget, rammed through the national assembly this week by the decree power of Article 49.3 – the hallmark of the Macron era.
As of next month, the tax on a Porsche Cayenne or a BMW X6 M will be €70,000 (£58,000), rising to €90,000 by 2027. That is a tax with teeth.
The malus écologique (green charge) is a rising penalty based on grams of CO2 per kilometre. These start at 113 g/km this year, tightened to 103 g/m by 2027, with some hardship exemptions. That is already enough to capture two thirds of all cars currently sold in France.
The tax on the workaday Renault Captur will double this year to €330, rising to €851 by 2027. The more powerful TCE 90 model will be close to three times that.
Weight above half a tonne will be punished on a rising scale. Above two tonnes, the penalty will rise by €30 a kilo, adding about €1,200 to a Tesla X or €1,800 to a larger e-Mercedes SUV. That makes sense. Lithium, cobalt and steel do not grow on trees.
The French car lobby Mobilians is furious. 'The whole sector is in a slump. Our production is the lowest since 1960, the plants have excess capacity and the market is more than 25pc below 2019 levels,' said Xavier Horent, its director-general.
'The country is drowning in a flood of social plans while the US and China leave us in the dust. Deficit spending is keeping the economy going without any structural reform. It is empty growth.'
Mr Horent said the buoyant CAC 40, the benchmark French stock index, hides 'transferred risk' landing on smaller firms and contractors who are sinking into crisis and cannot save themselves by relocating abroad.
'The modèle français is only protected against a massive devaluation by the euro. Bureaucracy is wasting away our talents and we are paralysed by outdated nostrums: protection instead of risk, pensions instead of work, waffle instead of action. They think they can conjure away the threat of bankruptcy with more taxes. The surfeit of regulations has become pathological,' he said.
We Britons can sympathise because we are struggling with the same aversion to enterprise and wealth-creation, the same pathological reflex of over-regulating and the same dreamy insouciance as China runs away with global manufacturing.
The difference is that even Labour is trying to do something about it, leaving aside the horrors of its first, botched Budget. Sir Keir Starmer is pushing through a radical shake-up of the planning system, evident over the last two weeks in a muscular push for nuclear fusion and small modular reactors, which together put the UK back on the global map as a can-do nuclear nation.
He is embracing artificial intelligence rather than trying to stop it as in Europe. Unlike many, I think markets will forgive this Government and the 2020s may prove to be a decade of recovery for the over-sold UK.
I have yet to be convinced that Emmanuel Macron's France has grasped the nettle on anything, apart from sinful cars. A care-taker budget was finally passed this week amid universal exhaustion and seven months after his snap election paralysed parliament. But it slipped through precisely because it does nothing to control runaway state spending.
'This is not really an austerity budget, simply one that is less expansionary than in recent years,' said Charlotte de Montpellier, of think tank ING.
Francois Bayrou, the French prime minister, himself said it was a dog's dinner. Extra taxes will make life even harder for French firms and minnows will receive a Reevesian battering, but the overall fiscal squeeze hardly moves the needle. The deficit will still be 5.4pc of GDP this year even if the economy bounces back from semi-slump conditions, which markets doubt. 'We find this hard to believe,' said ING.
France will continue to stick out at a treacherous time when global bond markets are no longer willing to fund ageing post-industrial states living beyond their means. Goldman Sachs says Japanese investors have slashed their holdings of French debt by €26bn over the past six months. Woe betide all debtors if Chinese banks start to repatriate their €3 trillion of offshore holdings.
ING said the Bayrou budget would push public spending even higher to 56.8pc of GDP, up from 56.6pc last year. At least Michel Barnier, the former French prime minister, made a stab at trying to reduce it, before he was defenestrated by the welfare Left and the national socialist welfare Right of Marine Le Pen.
French public debt will rise to 115.5pc of GDP this year. The gap with Germany is growing ever wider, which raises a question: how far can the two anchor economies of the euro diverge before monetary union becomes untenable – or before Berlin says ça suffit?
Above all, the budget eschews any serious surgery on the elephantine French state – and my goodness, it needs a full quadruple bypass. 'We think there are over 1,200 state agencies but nobody knows for sure, or knows what they do, not even the prime minister,' said Mathieu Darnaud, the Gaulliste leader in the Senate.
He cites the overlapping functions of the countless bodies making life a daily trial for French farmers: the agency for national cohesion of the territories (ANCT), the service and payments agency (ASP), the subsidy agency (FranceAgrimer), the ecology agency (Ademe), the other ecology agency (Cerema) and so on.
My family knows them well. They are the polite, well-meaning and befuddled companions of our livestock holding in Aquitaine. The farm inspection police, however, are on strike, distressed that they are not loved enough.
It has been almost eight years since Mr Macron swept France touting his book revolution. He seemed to be a modern physiocrat, the Turgot of our age, brimming with energy and vowing to unleash French enterprise. He would shred the 3,000-page code du travail [workers' rights] and repeal 360 separate taxes, some dating back to the Bourbons, others even to the Valois.
He would strike a grand bargain with Berlin, slashing the deficit and making France fit for euro condominium: in return, Germany would agree to an EU treasury and Hamiltonian debt-pooling.
Mr Macron has won a few bets. He has pulled in a good haul of foreign investments. La French Tech has nourished a thriving ecosystem of AI, fintech, and ag-tech start-ups, though London and Cambridge have done so as well. And whether he meant it or not, cars in France are going to be admirably green.
But at the end of the day, the French state is just as big today as it was when he took power. Public debt is 17 percentage points of GDP higher and flirting with a compound interest trap. The retirement age is still 64 and even that is not yet secure.
France remains a great nation and will get its act together in the end. But political expectations are so low at this point that it is deemed a success merely to pass a budget without a vote of no confidence.
So much promise has come to so little.
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