French President Nicolas Sarkozy Thursday said the government has earmarked EUR400 million in financing for research and development into low-carbon emission vehicles over the next four years.
Sarkozy said France, which currently holds the presidency of the European Union, intends to propose a modification of the rules governing state aid to private-sector companies.
He referred to a U.S. plan to provide $25 billion in cheap financing to U.S. car makers to help them finance the industrial transition to manufacture more environmentally friendly vehicles.
"Our partners are giving full support to their car makers; that's their right," he said in a speech delivered at the Paris Motor Show.
"But why should we have to live in a system in which we aren't allowed to help our car manufacturers to undertake a major technological metamorphosis that's decisive for environmental protection and capital for our energy independence?"
Sarkozy said he plans to propose that the European Investment Bank should become a vector of financing for European automobile manufacturers that are investing in low-emission vehicles, noting that the EIB has provided aid to the aerospace sector in the past.
He also said that the government will roll over into 2009 in its present form a system of financial incentives and penalties for buyers of new cars to encourage purchases of vehicles with low carbon dioxide emissions.
Sarkozy was speaking after French car makers PSA Peugeot-Citroen (12150.FR) and Renault SA (13190.FR) announced separately they have teamed up with state-controlled power utility Electricite de France (1024251.FR) to study technology for new all-electric vehicles that will be coming to the market a few years from now.