Italy weighs incentives to cut Chinese EV price advantage, report says

ROME -- Italy is considering new incentives for car purchases that would factor in carbon emissions in the manufacturing and distribution process, two sources close to the matter told Reuters on Monday, a way of protecting its industry against Chinese imports.

The scheme, inspired by one adopted in France last month, would potentially discourage purchases of Chinese-built electric cars (EVs), imports of which are increasing in Europe helped by lower prices than those produced by local automakers.

Rome sees the French incentive framework as "reasonable," one of the sources said, adding the government was studying such an option.

Italy is interested in following France's approach, the second source confirmed.

While normally incentives simply target the vehicles emissions, under the new rules proposed in France car models will be scored against government-set thresholds for the amount of energy used to make their materials, in their assembly and transport to market, as well as what type of battery the vehicles have.

European Union competition rules do not allow countries to favor local producers. However, criteria designed in France are likely to make Chinese cars ineligible for bonuses as the Asian country's industry is largely powered by coal-generated electricity and vehicles are shipped worldwide by boat.

Paris has said criteria it adopted are compliant with WTO rules because exemptions are allowed for health and environmental reasons.

Rome is aiming to agree a broad long term plan for its automotive industry with all local relevant groups, including Stellantis, Italy's sole major automaker, with the government pushing for it to bring its annual production in the country back to one million vehicles.

Talks, which are expected to go on until the end of this year, include new incentive schemes in Italy.

Industry Minister Adolfo Urso last month said Italians had used 80 percent of the incentives to buy vehicles produced abroad and that a revision of the incentive framework should support both a shift to more environmental friendly vehicles and national car output.