EU Investigating French R&D Aid To Peugeot-Citroën For Hybrid Diesel Car

The European Commission has launched an in-depth inquiry to determine whether a €96 million (about $140 million) aid that France plans to grant to the Peugeot-Citroën PSA Group and other partners for the development of a hybrid diesel car (VHD) is compatible with EC Treaty state aid rules. While the Commission fully supports the development of less polluting cars, EU believes that Peugeot-Citroën, would have undertaken this project even in the absence of a state subsidy, given that other car makers have announced similar projects. -Continued after the jump

EU Competition Commissioner Neelie Kroes said: “The Commission strongly supports the development of more environmentally-friendly cars. However, we have to ensure that the aid is not spent on R&D that would have been carried out by Peugeot-Citroën in any event or which its competitors may carry out without state aid."

France plans to grant €96 million aid to Peugeot-Citroën and 16 partners in the form of grants and repayable advances for the development of various parts of a hybrid diesel car. The total R&D costs of the project are €470 million out of which €271 million would constitute costs eligible for aid.

The aim of the VHD programme is to produce a car that emits less than 90g/km of CO₂ and has a fuel consumption of less than 3.4 litres/100 km. At the same time, the programme aims at substantially reducing the additional costs of buying a hybrid car. Both Peugeot and Citroen have presented several prototype cars equipped with the Diesel-Hybrid powertrain, the latest being the Peugeot 308 HDi Hybrid that debuted at the Frankfurt Show this September.

Thanks for the tip Chris P!