France cuts electric car purchase incentives

The French government will not wait until the end of the year to reduce the value of incentives for buying electric cars. The cuts will take effect within days and form part of the French executive’s measures to curb spending and bring public finances under control.

For now, unlike the situation seen in Germany at the end of last year, the French government will not scrap the incentives altogether, although it will cut them substantially.

The incentives currently available to private buyers range from €4,000 to €7,000. They will now be set between €2,000 and €4,000, according to the individual’s annual income:

• €4,000 - income of up to €16,300;
• €3,000 - income between €16,301 and €26,200;
• €2,000 - income above €26,201.

Despite the lower incentive amounts, the €47,000 price cap for an electric vehicle to qualify remains in place.

Greater difficulties for electric cars in France

France is Europe’s third-largest car market - behind Germany and the United Kingdom - and has been among the few markets to record positive growth in electric-car sales in 2024.

This change of direction by the French government could hardly have come at a worse time. Carmakers are still grappling with electric-car sales that are far below expectations, jeopardising compliance with the European Union’s CO₂ emissions-reduction targets by the end of 2025.

Moreover, the French situation is expected to worsen in 2025, as the funding allocated in the State Budget to electrify the vehicle fleet will also be cut sharply: from €1.5 billion in 2024 to €690 million in 2025.

The announced funding should support the purchase of around 200,000 electric cars. For comparison, between January and October this year, the French market registered 237,340 new electric vehicles (source: ACEA). The budget is therefore unlikely to cover the entire year.

Should the available funding run out next year, the French government may either release additional money for incentives - revising their values once more - or end them permanently.

Scrappage incentive ends

Adding further pressure, the French government will also end this year the scrappage incentive scheme that has operated continuously since 2008. It requires an old combustion-engined car, aged 10 years or more, to be exchanged for an electric vehicle, whether bought or leased, similarly to the scheme introduced in Portugal this year. The maximum incentive is €5,000.

However, unlike the results being seen in Portugal, the French programme has proved far more successful: more than one million cars were scrapped between 2015 and 2022.

With this scheme ending and the budget for purchase incentives being reduced - alongside a cut to their nominal value - concerns are growing over a substantial drop in electric-car sales in France in 2025.

As this is Europe’s third-largest market by electric-car volume, it could pull down the wider European market with it, as happened this year following developments in Germany.

Social leasing continues

Despite the broad retreat in electric-car purchase incentives, the French government has promised the return of social leasing, a measure that has proved highly popular.

Social leasing enabled lower-income people to access an electric car for €100 or €150 per month - considerably less than an equivalent lease. The first phase of the programme covered 50,000 people. The government has already pledged to bring the measure back in the second half of 2025.

Source: L’Argus