France cuts EV environmental bonus to a maximum of 4,000 euros

The French now have planning security for their upcoming electric vehicle purchases. As leaked in advance, the government will significantly reduce the budget for supporting electric vehicles compared to 2024 – from 1.5 billion this year to one billion euros. Seventy per cent, i.e. 700 million euros, is earmarked for the income-related eco-bonus (‘bonus écologique’) – the remaining 300 million euros will go towards light electric commercial vehicles and social leasing, which is to be renewed in the second half of 2025. The funding basis for light commercial vehicles and the ‘leasing social’ programme will change. The government will no longer use budget funds to subsidise them, but rather organise financing through energy-saving certificates (CEE).

The revised bonus will come into force on 29 November with the publication of a decree in the Official Gazette. However, the government will allow flexibility for already ordered vehicles, provided they are delivered before the end of February 2025. According to government estimates, the budget for 2025 could help promote the purchase of around 200,000 electric cars (with 10 million euros from the environmental bonus funding pot being reserved for used electric vehicles and retrofits). By comparison, almost 240,000 electric vehicles were sold in France in the first ten months of 2024. It is likely that the programme will be fully booked before the end of the year – as the government emphasises that it does not want to extend the budget limits under any circumstances.

Environmental bonus varies according to salary

Next year, the ‘bonus écologique’ will be paid out based on the income of the buyer or lessee and will also be linked to the CO2 emissions from the production of the vehicles and batteries. However, the subsidy will fall to between 2,000 and 4,000 euros. This year, it still ranged between 4,000 and 7,000 euros. In February, President Emmanuel Macron cut support by decree, reducing the subsidy for high-income earners by 1,000 euros and cancelling it altogether for tradespeople.

The Ministry of Finance believes that lower subsidy rates are entirely reasonable for the population: “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,” said the finance ministry back in October.

One thing is clear: France is basically following its previous line, according to which the switch to electric cars should be made more appealing to low-income citizens. At the beginning of the year, the government launched a subsidised EV leasing programme (‘leasing social’) for people with low incomes, but it had to be temporarily suspended in February due to immense demand and is now set to resume in the second half of 2025. The prerequisite for subsidised leasing in France was that the purchase price of the electrically powered vehicle was less than 47,000 euros and the weight is less than 2.4 tonnes. The programme was thus aimed at small cars.

Less generous ‘leasing social ’

No details are yet known about the new edition of the ‘leasing social’ programme – only that it will be less generous and financed differently. This year, a staggering 650 million euros were spent on 50,000 leased electric cars in a very short amount of time – with an out-of-pocket contribution of just 50 euros per month in extreme cases. For 2025, only 300 million euros will be allocated for this programme and light electric commercial vehicles. How the subsidies for electric vans and the like will be organised will be made public at a later date.

In principle, France’s environmental premium has been linked to CO2 emissions during the production of vehicles and batteries since the turn of the year 2023/24. 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.

Stricter ‘malus’ still under discussion

In addition to incentives, France has also been working with a ‘malus’ for years, which is levied on the initial registration of particularly environmentally harmful combustion engines. The government tightened this ‘malus écologique’ at the beginning of the year. And according to the current draft budget, the penalties could increase further between 2025 and 2027. However, this has not yet been decided. According to the French media, there is resistance in the Senate.

The environmental penalty is a one-off tax payable 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, staggered 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 – 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 will be further reduced from 118 to 113 g/km in 2025, and the maximum rate will be raised to 70,000 euros (for 193 g/km and more). According to media reports, reducing the threshold for the penalty planned for 2025 alone will enable the government to tax around 120,000 additional new vehicles. The calculation is based on sales in the first half of 2024. In 2026 and 2027, the malus thresholds and amounts will be further tightened.

reuters.com, journalauto.com, bfmtv.com (both in French)