In a recent statement, French Energy Minister Olga Givernet expressed her frustration, declares“I am prepared to take strong action against mandatory measures,” signaling the government’s intention to impose stricter rules on companies for not switching to greener vehicle fleets quickly enough. This effort to adopt electric vehicles (EVs) is part of a larger agenda to reduce carbon dioxide emissions and promote sustainability in France and Europe. France’s energy minister is set to make it compulsory for companies to buy a higher proportion of low-emission vehicles (such as electric and hybrid cars) when renewing their fleets, as current voluntary efforts fall short of the government’s environmental targets. The original aim was to push companies to more quickly transition to greener fleets, eventually increasing the availability of electric vehicles on the used market.

Government regulation: a heavy-handed approach

As Murray Rothbard succinctly put it put it“Any law or administrative rule is therefore unlawful and per se invasive and a criminal interference with the property rights of non-criminals.” This observation is very relevant in the case of the French government’s intervention in the commercial vehicle market. By forcing companies to adopt electric vehicles, the government is effectively infringing on companies’ property rights. The decision about which vehicles to buy should rest with the companies, based on their financial calculations, not with bureaucrats trying to achieve politically motivated environmental goals.

This type of coercion ignores the fundamental principle of market freedom. Companies function best when they can make decisions based on their cost-benefit analysis without being forced to follow arbitrary mandates. Rothbard’s point emphasizes that government coercion benefits one party at the expense of others, creating inefficiency and chaos in the marketplace. By forcing companies to comply with electric vehicle mandates, the government disrupts the natural flow of economic decision-making, leading to unintended negative consequences. Of course, the French energy minister Olga Givernet ignores that she has never worked directly in the energy sector, the automotive markets and probably never studied economics.

The misallocation of resources

One of the biggest challenges of government intervention, like Rothbard noted in The person, the economy and the stateis that “coercion only leads to further problems: it is inefficient and chaotic, it cripples production, and it leads to cumulative and unforeseen difficulties.” This is especially true with the French government’s investment in electric vehicles. While the intention is to reduce carbon emissions, the reality is that such centralized mandates lead to misallocated resources. By imposing top-down regulations, the government disrupts the natural decision-making process of companies, forcing them to invest in electric vehicles prematurely rather than focus on other potentially more productive or sustainable innovations.

For example, companies are reluctant to switch to electric cars due to concerns about vehicle autonomy and the long-term financial implications. Forcing companies to buy electric vehicles prematurely, without allowing the market to innovate and improve the technology naturally, leads to inefficient capital allocation. Resources that could have been better invested in other productive business areas are diverted to meet regulatory mandates. This misallocation inhibits economic growth and innovation, as companies must follow 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 significant fiscal incentives have been implemented. While the French government may be tempted to follow suit by raising taxes or fines on non-compliant companies, such measures would only exacerbate the problem.

Taxation and regulation function in this case as forms of coercion. The government risks reducing overall productivity by increasing the financial burden on companies that do not meet the electric car quotas. Companies may reduce 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.

Also like Rothbard pointed out“government regulation itself is the cause of the problem.” The fact that the government imposes mandates on companies primarily creates market distortions. If companies were left to operate freely, they would adopt electric vehicles (or not) when it made economic sense for them, not because of government coercion.

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

One of the most overlooked aspects of government regulation is its disproportionate impact on smaller businesses. Rothbard noted in The Progressive Era that the cost of complying with regulations “places an additional burden on small, new and innovative competitors and inhibits their chances of competing with existing and more established large firms.” This is particularly relevant in the case of electric vehicle mandates imposed on French companies.

Large companies such as Carrefour and Iliad may have the financial resources to gradually transition to electric vehicles without significantly disrupting their operations. But for small and medium-sized enterprises (SMEs), buying new electric cars, installing charging infrastructure and maintaining these vehicles can be prohibitive. Companies with more than 100 cars must buy 20 percent of the low-emission vehicles when renewing their fleet. This type of mandate can place significant financial strain on smaller businesses operating on tighter margins, reducing their ability to invest in growth and innovation.

Conclusion: Let the market decide

The French government’s approach to ‘greening’ corporate fleets is emblematic of the wider issue of government intervention in the economy. By imposing mandates on companies, the government disrupts the natural functioning of the market, leading to inefficiency, misallocation of resources and unintended consequences. Like Rothbard wrote in The person, the economy and the state“There is no compulsion at all in the free market.” It is only through voluntary, market-driven decisions that companies can develop and innovate.

Instead of forcing companies to introduce electric vehicles through regulation, the French government should allow the market to decide if, when and how this transition takes place. Businesses, responding to consumer demand and economic incentives, will naturally adopt more sustainable practices when it is in their economic interest to do so. In the meantime, the government should reduce barriers to innovation and competition, not impose heavy-handed mandates that distort the market and create long-term economic damage.