Germany and France agree to lower EU 2035 car emissions reduction target to 80%

Terms of the Franco-German compromise

German Chancellor Friedrich Merz and French President Emmanuel Macron agreed on a joint plan to lower the European Union's 2035 emissions reduction target for new passenger cars from 100% to 80% compared to 2021 levels. Under the 2023 EU legislation, all new passenger vehicles sold from 2035 were required to achieve zero tailpipe emissions, phasing out petrol, diesel, and hybrid models. In December 2025, the European Commission proposed reducing that requirement to 90%, permitting manufacturers to offset the remaining 10% through low-carbon European steel, synthetic e-fuels, and biofuels. The Franco-German agreement removes another 10 percentage points without requiring offset mechanisms, allowing carmakers to sell a larger proportion of combustion vehicles. Commission estimates indicated that a 90% target would leave 27% to 29% of new registrations as combustion-engine models after 2035, a share that will expand under the 80% threshold.

Industrial Accelerator Act and market protections

In exchange for French agreement on combustion rules, Germany conceded to Paris on the Industrial Accelerator Act. France insisted that European public funds, vehicle procurement programs, and consumer electric vehicle subsidies must apply strictly to cars and components made within the EU to protect local manufacturing against subsidized imports from China. The German government previously resisted these requirements, seeking to extend subsidy access to trading partners including Turkey, Morocco, and Vietnam. Berlin abandoned that position in the compromise. Explaining the push for multiple propulsion systems, Berlin officials argued against restricting vehicle technology.

Let us not decide today that in ten years only one technology can exist. Let electric, hybrid, synthetic fuels, and others coexist.

Dissolution of the Council blocking minority

The bilateral pact alters the voting balance in the EU Council of Ministers ahead of the European summit. France had previously led a group of seven member states defending the 2035 zero-emission deadline alongside Spain, the Netherlands, Denmark, Luxembourg, Portugal, and Sweden. Spanish Prime Minister Pedro Sánchez wrote to European Commission President Ursula von der Leyen in December 2025 opposing any relaxation of the 2035 mandate, and Spain reaffirmed that stance with the coalition in June 2026. German industry representatives emphasized transition pressures on other vehicle-producing nations, citing Volkswagen Group's decision not to guarantee the future of its Seat brand beyond 2029 due to electrification costs. With France shifting to support Germany, Italy, and Eastern European states, the opposing coalition loses its blocking minority.

Extended compliance windows and technical categories

The agreement also addresses the intermediate 2030 CO2 reduction target, which current law sets at 55% compared to 2021. While the Commission had proposed calculating compliance as an average over a three-year period from 2030 to 2032, Merz and Macron proposed a five-year window running from 2028 to 2032. This extension aligns with core automotive industry demands to avoid penalties during model transition phases. In ongoing trilog talks between the Commission, Parliament, and member states, negotiators are also evaluating a dedicated vehicle classification called VEEF (Vehicles Exclusively on Renewable Bio- and Synthetic E-Fuels). This standard would allow new cars running purely on climate-neutral fuels like hydrotreated vegetable oil (HVO) to remain registered after 2035.