France is reviewing its auto tax system to address falling car sales and streamline electric vehicle incentives. The government has convened automakers, retailers, and environmental groups to assess the impact of the current tax regime, which includes a malus tax based on vehicle weight and CO2 emissions. New car sales from January to May 2026 fell 0.6% year over year and are down 31% compared to 2019 pre-pandemic levels. Industry groups argue the tax system is hurting sales, but environmental groups point to rising EV adoption. Electric vehicles now account for 28% of new car sales in France, and over 40% in the corporate fleet market. The government is considering simplifying the complex tax structure and reviving conversion subsidies for scrapping old vehicles and buying EVs, potentially including used EV buyers. The outcome of this review could reshape France's EV market and serve as a signal for other countries balancing climate goals with industry competitiveness. The article provides concrete data on sales trends, tax impacts, and policy options under discussion.
