The Franco-German plan lowers the 2035 target from 100% to 90% compared with 2021, with no offsets required for the remaining 10%, according to a document seen by AFP.
Germany accepts tighter criteria in the Industrial Accelerator Act, pushed by France, requiring companies receiving public funds to source components made in Europe or in certain partner countries.
Environment Minister Carsten Schneider had held up the deal with a letter to Friedrich Merz on Wednesday, 14 October, before dropping his opposition on Friday, 16 October.
On Friday, 16 October, France and Germany confirmed an agreement on the future of the European car industry, announced in a joint declaration after a bilateral meeting on the sidelines of an EU summit that morning. The two governments say their climate course is unchanged: significantly cutting CO2 emissions while strengthening Europe's capacity to develop and build the next generation of electric vehicles. French President Emmanuel Macron posted on X after the announcement.
“With Germany, we have reached an agreement to secure the future of Europe's car sector.”
The governments propose a package that pairs an ambitious decarbonisation path with regulatory flexibility for different market conditions and technology openness. They say they want to work quickly with European partners to reach a wider agreement.
The current EU goal requires a 100% cut in CO2 emissions from new combustion vehicles by 2035 compared with 2021, with carmakers able to claim 10% flexibility through offset measures. Under the Franco-German plan, the target would fall from 100% to 90%, without further offsets being required. An AFP-seen Franco-German document consulted on Thursday says industry must cut emissions by 90% by 2035 without compensating the remaining 10%, unlike an initial Commission proposal. The text justifies this with the growing use of 'renewable' fuels, including biofuels. Paris accepted extra flexibility for combustion vehicles that Berlin had demanded, a concession that confirms the abandonment of an all-electric 2035 target, to the displeasure of environmental organisations.
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Germany agreed to stricter 'Made in Europe' criteria for the car sector in the Industrial Accelerator Act, a step France had pushed for. Companies receiving public funds would have to source components made in Europe or in certain partner countries. That logic would cover the 27 EU member states and close partners such as the United Kingdom, Norway and Switzerland. Berlin had long backed a wider 'Made with Europe' concept covering many more countries, and the measure is meant partly to resist the flood of Chinese vehicles into Europe. Vice Chancellor and Finance Minister Lars Klingbeil said in a statement:
“We do not want Germany to only assemble components from Asia, but for key components to be developed and produced here.”
Environment Minister Carsten Schneider had held up the deal with a letter to Chancellor Friedrich Merz on Wednesday, 14 October, demanding more conditions for green steel. After SPD ministers discussed next steps on Friday morning, he dropped his resistance. Ministry sources said the procurement of green and recycled steel could be regulated at national level. Schneider said in a statement:
“It was important to me that we also achieve climate and industrial policy progress for the steel industry on this occasion.”
The sequence ran from a Commission proposal of a 90% target in December 2025 to the Handelsblatt-reported package on 15 October and the joint declaration on 16 October.
Automotive expert Ferdinand Dudenhöffer forecasts that in 2035 combustion cars will still mostly be on US roads, while electric cars will dominate in Europe and China. He warns that combustion-related jobs could move to America as production follows demand. The package still has to be negotiated among the 27 member states and in the European Parliament. Berlin and Paris say they want an agreement with their partners quickly.
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The joint declaration, issued on Friday, 16 October, would require carmakers to cut CO2 by 90% by 2035 with no offsets for the remaining 10%. Germany also accepts stricter 'Made in Europe' criteria for companies receiving public funds.
AI text based on reports by POLITICO, Deutsche Welle, RTBF and other publishers. Changed .