French President Emmanuel Macron on Tuesday unveiled an eight-billion-euro (8.78 billion U.S. dollars) rescue plan to help the recovery of the domestic auto industry. Credit: AFP.

Much like Napoleon fashioned the institutions for modern-day France, the nation has launched a “historic plan” for a “historic situation.”

French President Emmanuel Macron on Tuesday unveiled an €8 billion rescue plan to help the recovery of the domestic auto industry hit hard by the anti-coronavirus lockdown, Xinhua reported.

The plan focuses on the production of environmentally friendly vehicles, the report said.

“The state will provide more than eight billion euros in aid to the sector,” Macron said. “In return, the car manufacturers have committed to relocate value-added production in France and to consolidate and maintain all industrial production on our sites.”

The president, who met with industry bosses, said the “historic plan,” which aims to “face a historic situation,” was based on a support package and a scrappage scheme to shift towards less polluting vehicles.

This massive investment aims to bolster research, encourage innovation and support the domestic production of high-tech electric and hybrid vehicles, the report said.

“We need to defend our industry and make France Europe’s top producer of clean vehicles by increasing output to more than one million electric and hybrid (EV) cars per year over the next five years,” said Macron.

“Bankruptcies should be avoided at all costs. We have to negotiate plans to adjust the activity, sometimes to reduce it, and accept short-time working,” he said following a visit to a Valeo car parts factory in northern France.

In order to boost demand, the government would increase the state bonus for consumers buying electric cars to €7,000 from €6,000, the report said.

Furthermore, a scrappage plan, which will be implemented from June 1, will offer a €5,000 incentive to motorists to encourage them to replace their vehicles with hybrid or electric ones.

To further promote the sector’s added value, the president also unveiled a €600 million investment fund “to support innovation, research and development in the French automotive industry in line with our major technological axes for the vehicle of the future.”

In this context, the president announced that Renault would join PSA and oil giant Total in a venture manufacturing batteries for electric and hybrid cars.

“It is a defense plan, a sovereignty plan for the automotive industry, which aims to relocate activity. It is indeed a plan for the future of the 21st century automobile,” the president said.

In mid-March, France imposed strict rules to prevent the spread of Covid-19, and the tough restrictions on people’s movement have negatively impacted local demand.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.