France and Germany Propose Easing Europe's 2035 Car Rule
The governments of French President Emmanuel Macron and German Chancellor Friedrich Merz proposed that carmakers cut average carbon dioxide emissions from new cars 90% by 2035, instead of the 100% that EU law now requires, with no obligation to make up the rest. In exchange, Germany backed French demands that cars bought or subsidized with public money be largely made in Europe.
France and Germany agreed on a joint plan to loosen the European Union's 2035 rule for new cars. As written, the law requires the new cars each carmaker sells in the EU from 2035 to emit, on average, no carbon dioxide from the tailpipe, which in practice ends sales of new gasoline and diesel cars. Cars already on the road are not affected.
Under the plan, carmakers would have to cut those average emissions 90% from 2021 levels and would not have to offset the remaining 10%. The European Commission, the EU's executive arm, proposed the 90% figure last December but required carmakers to make up the gap with European low-carbon steel or alternative fuels.
In return, Germany accepted a French demand for a "Made in Europe" preference for cars bought or subsidized with public money. Britain could qualify under conditions.
The plan is a position of two governments, not law. The other EU governments and the European Parliament must agree, and the rules would cover every carmaker selling in the EU, including Ford and Tesla.
Brussels — France and Germany agreed on a joint plan to soften the European Union's planned end to sales of new gasoline and diesel cars in 2035, pairing it with rules that favor cars and parts made in Europe when public money is spent.
"Our shared ambition is clear: to successfully transform our automotive industry while maintaining our climate ambition and ensuring that the cars of the future are produced in Europe," the two governments said in a joint statement published by Macron's office. According to Reuters, German Chancellor Friedrich Merz called the deal "a good day for motorists and for jobs in Germany, France and Europe".
What the 2035 rule says now
EU law sets limits on the average carbon dioxide emissions of all the new cars and vans each manufacturer sells in the bloc. A 2023 amendment requires a 100% cut from 2021 levels starting in 2035, meaning every new car sold from then on must have zero tailpipe emissions. That rules out new cars with gasoline or diesel engines, including hybrids, though existing cars can stay on the road.
In December 2025, the Commission proposed lowering the target to a 90% cut, which would let plug-in hybrids and some combustion-engine cars stay on sale after 2035. Carmakers would have had to make up the last 10% by using low-carbon steel made in the EU or by relying on e-fuels and biofuels.
What Paris and Berlin propose
The Franco-German plan keeps the 90% target and drops the requirement to offset the rest. According to Reuters, it also proposes measuring compliance over periods of several years rather than one, leaving unchanged until 2030 the formula used to estimate how much plug-in hybrids are driven on electric power, and counting cars that run on renewable and low-carbon fuels as zero-emission vehicles.
The other half of the deal concerns the Industrial Accelerator Act, a bill the Commission proposed in March that would tie public purchases and subsidies to minimum shares of European-made content. Euronews reported that under the joint plan, 70% of a car's components, not counting the battery, would have to be produced in Europe, along with 10% of battery content. France wanted the preference limited to the EU's 27 members; Germany wanted trusted outside partners included. The plan extends it to European partners that were part of the EU's single market on January 1, 2020, the zone of shared EU trade rules. That would include Britain, which left the single market at the end of 2020, provided it and any other such partner open their own public contracts and subsidies to EU companies and align with EU rules on foreign investment and trade protection. Reuters reported that this could mean Britain adopting EU measures that limit imports of Chinese-built electric and hybrid cars. An official in the French presidency said Britain and Switzerland could qualify under certain conditions.
Support and objections
The agreement had been expected on October 15 but was held up by objections from Germany's Social Democrats, the junior partner in Merz's coalition, who later dropped them. Germany's environment minister, Carsten Schneider, a Social Democrat, said in a German-language statement that the plan is a modern realignment of German industrial policy that gives much more weight to keeping jobs and production sites, and that German companies are clearly expected to use it to invest in and guarantee jobs in Germany. Macron said he hoped it could "swiftly lead to an agreement with our partners."
Stellantis, the maker of Jeep, Peugeot and Fiat, called it an important step toward completing the European automotive package. A European index of car and parts stocks rose nearly 2%. Toyota's European division has argued for including partners such as Britain, Canada, Japan, South Korea and Turkey. Anna Krajinska of the campaign group Transport & Environment called the deal a "historic mistake" that would weaken carmakers' incentive to invest in electric vehicles. An official in the office of British Prime Minister Andy Burnham said inclusion would help Britain's car industry but that the details had yet to be seen.
What happens next
The plan binds no one yet. The other EU governments and the European Parliament must agree before any change becomes law. According to Euronews, members of the Parliament are due to vote on the Commission's car proposal on November 23, three days after an EU-UK summit in Brussels, and Reuters reported that a final text is unlikely before early next year. The EU's emissions limits apply to every manufacturer that sells new cars in the bloc, including American companies such as Ford and Tesla.