According to its draft budget for 2025, the French government is planning to cut support for the purchase of electric vehicles by a third next year. At the same time, penalties for vehicles with high CO2 emissions are to increase.

In France, up to 1.5 billion euros are available this year for the 'bonus écologique' electric car purchase premium. Next year, this budget is to be reduced to 1 billion euros. This was reported by Reuters, among others, citing the draft budget for 2025 submitted by the government. The Ministry of Finance's reasoning: "Thanks to the economy of scale and to progress on batteries, the cost of electric vehicles has gone down and their share of total vehicles sold has increased, reducing the need for subsidies."

The government has not yet specified exactly where the budget cuts will have an impact. The 'bonus écologique' is currently graduated according to the income of the buyer or lessee and is also linked to the CO2 emissions from the production of the vehicles and batteries. The maximum subsidy for the higher-income half of the population is currently 4,000 euros, while the maximum subsidy for the lower-income half is 7,000 euros. Back in February, President Emmanuel Macron reduced the subsidy for high-income earners by 1,000 euros by decree and cancelled it completely for tradespeople. Since then, there has also been a 1,000 euro reduction for commercial vehicles.

With regard to the budget cut planned for 2025, it has so far only been stated that "funding for the most modest households will be prioritised." France would thus be following the previous line, according to which the switch to electric cars is to be made affordable primarily to low-income households. We remember: at the beginning of the year, the government launched a subsidised e-car leasing programme for people on low incomes, but this had to be temporarily suspended in February due to immense demand and is not due to be resumed until 2025. The prerequisite for subsidised leasing in France is that the purchase price of the electric car is less than 47,000 euros and the weight is less than 2.4 tonnes. The programme is therefore aimed at small and medium-sized cars.

Since the turn of the year 2023/24, France's environmental bonus has been linked to CO2 emissions in the production of vehicles and batteries. Various environmental criteria are assessed, such as the characteristics of the vehicle model itself, the weight, the origin and environmental impact of the materials used, the life cycle assessment of the assembly plant and the transport routes to the point of sale. It is therefore practically impossible for Chinese manufacturers to fulfil the criteria.

In addition to incentives, France has also been working for years with a tax, which is levied on the initial registration of particularly polluting combustion engines. The government tightened this 'malus écologique' at the beginning of the year. And according to the draft budget, the penalties are set to increase further between 2025 and 2027.

The environmental penalty is specifically a tax that is payable once when a car is first registered in France and is intended to ensure that lighter and low-emission vehicles come onto the market. The penalty tax, which is graduated according to CO2 emissions, has been in force since the turn of the year for cars from 118 g/km according to WLTP (in 2023 it was 123 g/km) and starts at 50 euros. What still seems relatively moderate increases rapidly with higher CO2 emissions - to a maximum value of currently up to 60,000 euros. The latter applies if CO2 emissions are higher than 194 grams per kilometre.

If the government has its way, the entry threshold is to be further reduced from 118 to 113 g/km in 2025 and the maximum rate raised to 70,000 (for 193 g/km and more). According to media reports, the reduction in the trigger threshold for the penalty planned for 2025 alone will enable the government to tax around 120,000 additional new vehicles, assuming sales in the first half of 2024. In 2026 and 2027, the malus thresholds and amounts will then be further tightened.