The incident, described by the French interior minister as "an attempted attack", caused no injuries. Police sources said a Kalashnikov rifle, handguns and gas bottles were found in the car.
A driver deliberately ploughed his car into a police van on the Champs-Elysees avenue and died in Paris on Monday, France's interior minister said.
Gerard Collomb described the incident as "an attempted attack."
Police sources earlier said that a Kalashnikov rifle, handguns and gas bottles were found in the car - Renault Megane.
The car hit the front of the police van as it was overtaking it and caught fire, police said.
No officers or bystanders were injured and the situation was under control, a police spokeswoman told reporters.
The Paris prosecutor's counter-terrorism unit said it had opened an investigation into the incident, which occurred only a short walk away from the Elysees presidential palace and the US embassy.
A report on a French TV channel said the man was known to security services and had been carrying a gas bottle in the car.
France has been on high security alert following a series of militant attacks in recent years, including the shooting of a policeman in an Daesh-claimed attack on a police bus on the Champs Elysees in April.