French automotive fiscal policy and revenue shifts

France is navigating significant fiscal shifts driven by changes in the automotive sector and the transition to electric vehicles. In the first half of 2026, taxes on new vehicles—specifically the CO₂ malus and weight tax—generated €523.4 million. Due to lowered tax thresholds, 51% of new vehicles were subject to penalties, leading to projections that annual revenues will exceed €1 billion for the first time. German premium brands, including Mercedes, BMW, Volkswagen, and Audi, are major contributors to these collections.

Simultaneously, the French vehicle fleet is aging, with the average car age rising to over 11 years. While hybrid and electric models show sales rebounds, the overall transition to electric vehicles poses a long-term threat to traditional fuel tax revenues. The state estimates a potential loss of approximately 13 billion euros in TICPE revenue by 2030.

To address these losses, the French government has formally denied rumors regarding the implementation of a per-kilometer tax for electric vehicles, clarifying that no such plan has been voted on. Instead, experts are discussing a potential annual possession tax of approximately 95 euros per vehicle, calculated based on weight or footprint. Such a measure could potentially generate 3 billion euros, covering roughly 10% of expected energy excise losses by 2050. This approach contrasts with neighbors like Germany, Iceland, and the United Kingdom, which utilize or plan distance-based charges. Experts warn that any significant increase in electricity taxes must be managed to ensure electric vehicles remain more cost-effective than internal combustion engine vehicles.