Police sources told AFP that a Kalashnikov rifle, handguns and gas bottles were found in the white Renault Megane.
Video showed orange smoke pouring from the car after the impact as the vehicle sat in the middle of the prestigious avenue which is lined with shops and cinemas.
The police and the army have consistently been attacked by extremists in France.
"Security forces have been targeted in France once again," Interior Minister Gerard Collomb said, calling the incident an "attempted attack".
The weapons and explosives found in the vehicle "could potentially blow this car up," he added.
Interior ministry spokesman Pierre-Henry Brandet said bomb disposal experts were on the scene to "ensure the vehicle poses no further danger."
Later, the doors of the car and the bonnet were open as it was searched.
No police or bystanders were injured in the incident near the Grand Palais exhibition hall.
"People were running every which way," said a 51-year-old bystander who gave his name only as Alexandre. "Some shouted at me to get away."
Anti-terrorism prosecutors have opened an investigation.
Police closed two of the Metro stations on the Champs-Elysees, but two hours after the attack tourists were back taking selfies of the Arc de Triomphe and visiting shops.
Collomb said the attack "shows once again that the threat (of an attack) remains extremely high in France".
The incident came just two months after a policeman was shot and killed on the avenue, days before the first round of France's presidential election.
After that attack, a note praising the Daesh group was found next to the body of the gunman, Karim Cheurfi, and weapons including a shotgun and knives were found in his car.
On June 7, a hammer-wielding Algerian man was shot and wounded by police after he struck an officer on the head in front of Notre Dame cathedral in Paris, shouting it was in revenge "for Syria".
He had pledged allegiance to the Daesh group in a video found at his home.