Germany and France have agreed a joint position that would further soften the European Union’s planned phase-out of new petrol and diesel cars from 2035, in exchange for stricter “Made in Europe” rules on public support for the automotive sector.
The joint paper, titled “Securing the future of the European automotive industry”, was published on October 16.
Under current EU law, carmakers must cut average CO2 emissions from new passenger cars by 100 per cent compared with 2021 levels by 2035, effectively ending the sale of new conventional combustion-engine vehicles. Manufacturers that miss the fleet target face a penalty of €95 for every gramme of excess CO2 on each new car sold.
In December 2025 the European Commission proposed reducing that target to 90 per cent, with the remaining 10 per cent to be offset through measures such as low-carbon European steel, e-fuels or biofuels.
According to the position paper, first reported by German media, German Chancellor Friedrich Merz and French President Emmanuel Macron have agreed that the 2035 reduction should be limited to 90 per cent without any obligation to offset the residual 10 per cent.
With additional flexibility for alternative fuels, the effective requirement could fall to around 80 per cent. The two countries also want more flexibility on intermediate targets and a new category for vehicles running exclusively on renewable fuels. The paper says the rising use of renewable fuels across the existing fleet should count towards the target.
The mandatory electric vehicle quotas for commercial fleets would, for example, be converted into non-binding national targets.
In return, Germany would support tighter eligibility criteria limiting state aid and public procurement in the car sector largely to vehicles produced in the EU (with possible inclusion of the United Kingdom), with components having at least 70 per cent European origin. That restriction would apply from 2028 to purchase premiums, leasing subsidies and public contracts, and British inclusion would depend on London aligning its tariffs on Chinese electric cars with the EU’s.
The proposal allows for continued sales of combustion-engine vehicles as long as the fleet average emission target of about 11g of CO2 per kilometre is achieved.
Merz said on X on October 16 that it was “a good day for motorists and for jobs in Germany, France and Europe”.
“Emmanuel Macron and I have agreed on a package for freedom of choice, technological openness and upholding climate goals. This is an investment signal to industry.”
The text was held up for two days by resistance inside the German coalition, where Social Democratic Party (SPD) ministers Carsten Schneider and Lars Klingbeil pressed for a 95 per cent target. Klingbeil later welcomed the outcome, saying: “We have made the right decisions for the hundreds of thousands of employees.”
France had previously opposed going beyond the Commission’s proposal, while Germany has long sought greater flexibility for its automotive industry.
An agreement between the two largest EU economies would be expected to secure a majority in the Council of the European Union, which could settle a common position as early as December.
The proposals remain subject to negotiation with the European Parliament and other member states, where the political groups remain far apart. The Commission’s original revision is still under discussion in both the Council and Parliament.
Susanne Goetz, mobility officer at the German branch of the European Federation for Transport and Environment (T&E), said Germany and France were “making a historic mistake”.
T&E argues that the deal is above all a concession to carmakers and that it might hinder the development of affordable electric vehicles and necessary investments in e-mobility supply chains, potentially leading to the decline of the European automotive industry.
The push from the two leading EU countries came a day after Tesla unveiled a new Roadster in the United States, fitted with thrusters that Elon Musk said let it “basically fly like a rocket”.
D’un côté, on reste tourné vers le passé en ressuscitant de vieux modèles sans réelle valeur ajoutée et de l’autre on se lance dans les voitures volantes.
Reste à voir comment tout ça va se terminer… pic.twitter.com/yd5TCFIlkI
— Tribune Populaire🌐 (@TribunePop23) October 16, 2026
🤷♂️ pic.twitter.com/vgkoBYnhAK
— Snicklink (@snicklink) October 16, 2026
