The corridors of the European Union's summit buzzed with a quiet but decisive negotiation. German Chancellor Merz and French President Emmanuel Macron met in the halls of the EU headquarters, a setting that had witnessed the birth of the single market and the euro. The two leaders, both known for their pragmatic approach to industry, set the stage for a pact that would alter the trajectory of European automotive policy.
At the heart of the agreement lies a modest but meaningful concession: Germany will receive a 10% increase in the CO₂ flottengrenze for new vehicles by 2035. This adjustment allows German automakers to relax their emissions targets slightly, a relief that acknowledges the country's heavy reliance on internal combustion engines and the current pace of electrification. In return, German manufacturers must prioritize European suppliers when bidding for public tenders and grants, a clause designed to keep the supply chain within the EU.
The pact also introduces stricter "Made in EU" requirements. Vehicles sold in the European market will now need to demonstrate a higher proportion of components sourced from within the bloc. This move is intended to curb the import of parts from outside the EU, thereby strengthening the continent's industrial base and ensuring that the environmental benefits of new cars are not offset by distant production chains.
By negotiating these terms, Germany aims to preserve its automotive sector's global standing while still contributing to the EU's 90% CO₂ reduction goal by 2035.
While the 10% leniency offers immediate breathing room, the agreement is unmistakably forward-looking. France has long questioned the viability of internal combustion engines after 2035, and the new rules accelerate the shift toward electric vehicles. By easing the ban on internal combustion engines only in 2035, the EU gives manufacturers time to transition, but the accompanying supply-chain tightening signals a clear preference for electrified fleets.
The German government secured comprehensive concessions regarding climate targets in exchange for industrial policy requirements. Berlin's stance—"Berlin wants more leniency on emissions targets"—reflects a broader strategy to balance environmental ambition with economic competitiveness. By negotiating these terms, Germany aims to preserve its automotive sector's global standing while still contributing to the EU's 90% CO₂ reduction goal by 2035.
Paris entered the negotiations with a neutral tone, yet its questions about the future of internal combustion engines after 2035 underscored a proactive stance. The French leadership's willingness to push for stricter EU rules demonstrates a commitment to a cleaner automotive future, even as it navigates the practical realities of industry transition.
Following today’s ACEA Light Duty Vehicle Board meeting in Brussels, European vehicle manufacturers are calling for substantial progress on the EU automotive package, with a view to finalising it early next year. Vehicle manufacturers and the wider value chain need that certainty now. Speaking to journalists, ACEA President and CEO of Mercedes Ola Kaellenius underlined that European vehicle manufacturers are successfully accelerating their transformation towards zero-emission mobility. Now it’s time for the EU to reform the legislative framework so that it will help achieve the triple goal of decarbonisation, economic security and job preservation. Full statement ➡️ https://t.co/bOFJzJMQeJ
The European Commission has long advocated for a 90% reduction in CO₂ emissions from new vehicles by 2035. The agreement between Germany and France aligns with this vision, albeit with a more gradual approach for German manufacturers. By balancing leniency with stricter supply-chain mandates, the EU moves closer to its climate targets while maintaining industrial cohesion.
The pact marks a pivotal moment in European automotive policy. It signals a willingness among member states to negotiate compromises that respect national industrial realities while advancing collective climate goals. As the EU prepares to roll out the new rules in the Council, the automotive world watches closely, aware that the next decade will reshape the very fabric of how cars are built, sourced, and powered across the continent.