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Italy weighs auto incentive scheme to cut Chinese EV price advantage

Security guards stand at the BYD booth at the Auto Shanghai show, in Shanghai, China April 19, 2023. REUTERS/Aly Song/File Photo

Italy weighs auto incentive scheme to cut Chinese EV price advantage. To defend its auto sector against Chinese imports, Italy is mulling new incentives for car sales that would consider carbon emissions during the production and distribution process, according to two people familiar with the situation who spoke to Reuters on Monday.

The plan, modeled after one voted in France last month, might deter consumers from buying Chinese-built electric vehicles (EVs), whose imports are rising in Europe thanks to their cheaper pricing than those of domestic automakers.

One of the individuals claimed that Rome thought the French incentive system was “reasonable” and that the administration was looking into it. The second source affirmed Italy’s interest in adopting France’s strategy.

The new rules proposed in France would score car models against government-set thresholds for the amount of energy used to make their materials during their assembly and transport to market and what kind of battery the vehicles have. Normally, incentives only target a vehicle’s emissions.

Countries are not permitted to favor domestic manufacturers under European Union competition laws. However, since the Asian nation’s industry is mostly fueled by coal-generated electricity and automobiles are moved worldwide by boat, French-designed requirements are likely to exclude Chinese autos from incentives.

Paris’s enacted standards comply with WTO regulations since exceptions are permitted for environmental and public health concerns.

Rome hopes to reach an agreement on a comprehensive long-term strategy for the country’s automotive sector with all local stakeholders, including Stellantis, the sole major carmaker in Italy and producer of the Fiat brand (STLAM.MI), which the government is pressuring to increase its yearly output to one million vehicles.

New incentive programs in Italy are a subject of the negotiations, which are anticipated to last through the end of this year.

Adolfo Urso, the industry minister, claimed last month that Italians had utilized 80% of the subsidies to purchase cars made overseas and that the incentive system should be changed to assist both a switch to more environmentally friendly cars and domestic auto production.

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