In a move that could redefine the automotive landscape, France and Germany have reached a groundbreaking agreement on the future of the industry within the European Union. The deal, struck on October 15 2026, addresses two critical issues: the EU’s ambitious emissions targets and the push for greater European economic self‑reliance. At its core, the agreement softens the EU’s planned 2035 ban on internal combustion engines, allowing manufacturers to continue selling diesel and gasoline vehicles beyond that date—provided they meet stringent new emissions standards.
For years, the EU has been at the forefront of global efforts to combat climate change, with the automotive sector a key battleground. The original 2035 ban aimed to phase out internal combustion engines entirely, pushing the industry toward full electrification. But this new deal reflects a pragmatic shift, acknowledging the challenges automakers face in transitioning to zero‑emission technologies while maintaining competitiveness in a global market.
Under the agreement, automakers will be required to reduce their CO2 emissions by 90 % by 2035. This target is both ambitious and flexible, allowing manufacturers to continue producing internal combustion engines if they can meet the emissions threshold. The compromise is a win for Germany, which has lobbied for more time to adapt to stricter environmental standards.
The inclusion of provisions for biocarburants—fuels derived from renewable biological sources—further underscores the EU’s commitment to sustainability.
France, meanwhile, has long championed the ‘Made in EU’ initiative, pushing for policies that prioritize European‑made components and protect domestic industries. As part of the deal, Germany has agreed to stricter definitions of European preference, ensuring that companies receiving public funds source a significant portion of their components from within the EU or partner countries. This provision aligns with French President Emmanuel Macron’s vision of a more self‑reliant Europe, capable of competing with major global economies.
The agreement is a delicate balancing act, addressing both environmental and economic concerns. By allowing internal combustion engines to remain on the market, the deal provides breathing room for automakers grappling with the high costs and technological challenges of electrification. At the same time, the 90 % emissions reduction target ensures that the EU remains on track to meet its climate goals.
The inclusion of provisions for biocarburants—fuels derived from renewable biological sources—further underscores the EU’s commitment to sustainability. These alternative fuels could play a crucial role in reducing emissions from internal combustion engines, offering a bridge to a fully electric future.
France’s insistence on European preference rules reflects a broader trend toward economic resilience within the EU. With global supply chains under strain and geopolitical tensions rising, European leaders are increasingly focused on building resilience at home. The agreement’s requirement for automakers to source components locally when receiving public funds is a significant step in this direction, ensuring that EU investment translates into jobs and growth within the bloc.
For Macron, the deal is a victory for his long‑standing advocacy of European industrial policy. By securing Germany’s support for stricter European preference rules, he has strengthened the EU’s ability to compete on the global stage while safeguarding its strategic interests.
The agreement is expected to smooth the way for the EU’s legislative process on automotive emissions and European preference rules. With France and Germany—the bloc’s two largest economies—aligned, the path forward is clearer. But challenges remain. Automakers will need to invest heavily in new technologies to meet the 90 % emissions reduction target, and the transition to greater European self‑reliance will require significant adjustments to global supply chains.
As the EU moves closer to its 2035 deadline, the automotive industry will be watching closely. The deal between France and Germany marks a new chapter in the bloc’s efforts to balance environmental ambition with economic pragmatism. For now, the road ahead is clearer—yet the journey is far from over.