In a recent statement, French Energy Minister Olga Givernet expressed her frustration: declaring“I am prepared to take strong action on mandatory measures,” signaling the government’s intention to impose tougher regulations on companies that do not transition to greener vehicle fleets quickly enough. This desire to adopt electric vehicles (EV) is part of a broader program aimed at reducing carbon emissions and promoting sustainable development in France and Europe. France’s energy minister is set to make it mandatory for companies to purchase a higher percentage of low-emission vehicles (such as electric and hybrid cars) when renewing their fleets, as current voluntary efforts do not do not meet the government’s environmental objectives. The initial goal was to push companies to move more quickly to greener fleets, thereby increasing the availability of electric vehicles on the used market.

Government Regulation: An Authoritarian Approach

As Murray Rothbard succinctly summarizes put it on“Any law or administrative rule is therefore illegitimate and inherently invasive and constitutes criminal interference with the property rights of non-criminals.” This observation is particularly relevant in the case of French State intervention in the company vehicle market. By forcing businesses to adopt electric vehicles, the government is effectively violating the property rights of businesses. The decision to purchase vehicles should be made by companies, based on their economic calculations, not by bureaucrats seeking to achieve politically motivated environmental goals.

This type of coercion ignores the fundamental principle of free markets. Businesses operate best when they can make decisions based on cost-benefit analysis without being forced to comply with arbitrary mandates. Rothbard’s view emphasizes that state coercion benefits one party at the expense of others, thereby creating inefficiency and chaos in the market. By forcing businesses to comply with electric vehicle requirements, the government is disrupting the natural flow of economic decision-making, leading to unintended negative consequences. Certainly, the French Minister of Energy, Olga Givernet, is unaware that she has never worked directly in the energy sector, the automobile markets, and has probably never studied economics.

Poor allocation of resources

One of the main challenges of government interventions, as Rothbard points out note In Man, economy and stateit is that “coercion only creates new problems: it is inefficient and chaotic, it paralyzes production and it leads to cumulative and unforeseen difficulties”. This is especially true with the French government’s push for electric vehicles. Although the intention is to reduce carbon emissions, the reality is that such centralized mandates result in misallocation of resources. By imposing regulations imposed from above, the government disrupts the natural decision-making process of businesses, forcing them to prematurely invest in electric vehicles rather than focusing on other, potentially more productive or sustainable innovations.

For example, businesses are hesitant to transition to electric vehicles due to concerns about vehicle range and long-term financial impacts. Forcing companies to purchase electric vehicles prematurely, without allowing the market to innovate and naturally improve the technology, leads to inefficient capital allocation. Resources that could have been better invested in other productive areas of activity are diverted to meet regulatory mandates. This misallocation hinders economic growth and innovation because businesses must comply with government regulations rather than respond to market signals.

The unintended consequences of taxation and regulation

Note that only 11 percent of new company vehicles in France are electric, compared to 35 percent in Belgium and Denmark, where more substantial tax incentives have been put in place. Although the French government might be tempted to follow the same path by increasing taxes or penalties on companies that do not comply, such measures would only exacerbate the problem.

Taxation and regulation act in this case as forms of coercion. The government risks reducing overall productivity by increasing the financial burden on businesses that fail to meet EV quotas. Companies may cut other investments, such as hiring or expanding operations, to comply with costly environmental regulations. This ripple effect affects the economy, reducing growth and increasing unemployment.

Moreover, as Rothbard said underlines“government regulation itself is the cause of the problem.” Having the government impose mandates on businesses creates market distortions in the first place. If businesses could operate freely, they would (or not) adopt electric vehicles when it made economic sense for them, not because of government coercion.

The burden on small and medium-sized enterprises (SMEs)

One of the most overlooked aspects of government regulation is its disproportionate impact on small businesses. Rothbard note In The Progressive Era that the cost of complying with the rules “imposes an additional burden on small, new and innovative competitors and hinders their chances of competing with existing, larger, more serious companies.” This is particularly relevant in the case of electric vehicle obligations imposed on French companies.

Large companies like Carrefour and Iliad could have the financial resources to gradually transition to electric vehicles without significantly disrupting their operations. However, for small and medium-sized businesses (SMEs), purchasing new electric vehicles, installing charging infrastructure and maintaining these vehicles can be prohibitive. Companies with more than 100 cars must purchase 20 percent low-emission vehicles when renewing their fleet. This type of mandate could result in significant financial hardship for smaller businesses operating on lower margins, reducing their ability to invest in growth and innovation.

Conclusion: let the market decide

The French government’s approach to “greening” corporate vehicle fleets is emblematic of the broader issue of state intervention in the economy. By imposing mandates on businesses, the government disrupts the natural functioning of the market, leading to inefficiency, misallocation of resources, and unintended consequences. Like Rothbard wrote In Man, economy and state“There is no coercion in the free market.” It is only through voluntary, market-driven decisions that businesses can thrive and innovate.

Rather than forcing companies to adopt electric vehicles through regulation, the French government should let the market determine if, when and how this transition will occur. Businesses, responding to consumer demand and economic incentives, will naturally adopt more sustainable practices when it is in their financial interest to do so. In the meantime, the government should reduce barriers to innovation and competition, not impose harsh mandates that distort the market and create long-term economic harm.