The French government revealed plans on Thursday to cut its financial support for electric vehicle (EV) purchases by a third while imposing stricter penalties on high CO2-emitting vehicles. The changes are part of France’s 2025 budget proposal, reflecting a shift in the nation's approach to EV subsidies as market conditions evolve.
The government’s assistance for purchasing clean vehicles will decrease from €1.5 billion ($1.64 billion) to €1 billion ($1.09 billion) in 2025, according to the finance ministry. The ministry justified the cuts by citing advancements in battery technology and economies of scale, which have reduced EV costs while increasing their market share. Assistance will focus more on lower-income households, but specifics on how this will affect bonuses or leasing programs were not disclosed.
Currently, the government offers up to €7,000 ($7,634) for an electric vehicle and provides leasing options that allow low-income households to access EVs starting at €100 ($109) per month. However, the proposed reduction could affect the number of vehicles eligible for subsidies and the financial assistance provided.
Despite the reduced need for subsidies, some industry representatives have expressed concern over the timing of the cuts. Luc Chatel, president of the French automobile lobby group Automobile Platform, stressed that government support remains critical to help automakers meet stringent carbon emissions targets and maintain the momentum of the EV transition. "If you change the rules every four days and reduce the bonus, what will happen? We saw it in Germany," Chatel warned, referring to the sharp decline in EV sales in Germany after it ended its own subsidy program.
In Germany, the share of EVs fell from 16.4% to 12.6% at the beginning of 2024, following the end of the subsidy program, highlighting the importance of financial incentives to sustain market growth.
In addition to cutting subsidies, the budget proposal includes plans to increase penalties on vehicles emitting higher levels of CO2. Starting in 2025, penalties will apply to vehicles emitting 5g CO2/km, with even stricter thresholds set for 2026 and 2027, at 7g CO2/km. This move is part of France's broader strategy to encourage a faster shift towards cleaner transportation and meet its carbon reduction goals.
The decision comes at a time when European automakers are facing a tough market, with declining global demand and increasing competition from Chinese EV imports. As the industry adjusts to these challenges, the French government hopes that the private sector will continue to play a key role in accelerating the green transition.
