Germany and France provisionally agree to soften 2035 combustion engine phase-out
The provisional deal would let more combustion cars be sold after 2035, with manufacturers no longer offsetting the last 10% of their CO2 emissions under the draft.
A provisional Franco-German position
Germany and France have provisionally agreed a joint position that would further soften the planned end of combustion engine sales in the EU by 2035, AFP reported on Thursday, 15 October, citing diplomatic sources. A government spokesperson told AFP the agreement was on the home straight, though final approval from Germany was still outstanding. The arrangement is meant to settle a dispute that threatened to block two legislative procedures in Brussels. Under current plans, the fleet CO2 limits that set how much carbon dioxide a manufacturer's new cars may emit on average each year fall to zero by 2035. The European Commission has instead proposed cutting those limits by 90% compared with 2021, with the remaining emissions offset elsewhere. SPIEGEL has seen the preliminary agreement paper, which sets out a negotiating package for the two governments.
What the draft would change
Manufacturers would still cut their CO2 emissions by 90% by 2035 under the draft, but the remaining 10% would not be offset, so more combustion cars could be sold after 2035. From 2028, state purchase premiums, leasing support and public contracts would go only to vehicles assembled in the EU or the UK, with at least 70% of component value from European production. Battery content would be phased in at 10% in 2028 and 2029, rising to 80% in 2032, a rule meant to shield domestic industry from Asian competition. The draft also gives carmakers more room, since overruns in 2030 could be offset by savings in 2031 and CO2 credits could build up from 2029.
- 2028
- 10 %
- 2029
- 10 %
- 2032
- 80 %
How the deal was built
Handelsblatt reported that Chancellor Friedrich Merz and President Emmanuel Macron agreed the outlines of a compromise in early October, with France easing on climate rules in return for German support on industrial demands. According to Handelsblatt, Merz pushed for a deeper softening of the 2035 phase-out and secured that member states will no longer be obliged to push electrification of large company car fleets through binding quotas. Macron, in turn, won stricter 'made in Europe' rules, under which state purchase premiums and public contracts would go only to cars made in Europe. The timeline below traces the steps reported so far.
- Merz and Macron reportedly agree the outlines of a compromise, according to Handelsblatt
- SPD ministers send Merz a letter offering to cut the reduction target from 100% to 95%
- AFP reports a provisional Franco-German common position, with German final approval pending
Britain and China
The draft counts Britain as part of the 'made in Europe' zone, according to AFP's reading of the document. Handelsblatt reports that British vehicles would qualify only if London aligns its trade protection instruments with EU standards. The Financial Times reports that including Britain could be tied to conditions on trade policy toward China. The point matters for carmakers because many build vehicles and components across borders, and German groups run large production sites in Britain.
Pressure inside Berlin's coalition
On Wednesday, 14 October, Environment Minister Carsten Schneider wrote to Chancellor Merz on behalf of himself and Finance Minister Lars Klingbeil, both SPD, offering to lower the new-car CO2 reduction target from 100% to 95%. Another 5% could be compensated if green and recycled steel made in Europe is used in vehicles. The ministers also want the state to act as an anchor customer for climate-friendly products, with a rising share of over 25% green steel in public tenders. The letter, which Reuters saw on Thursday, sets a firm limit on the offer.
We reject further compensation below 90 percent.
The letter says the offer is meant to make an agreement with the French government possible, and the ministers tie their consent to these industrial demands.
What remains open
The Franco-German position is not a final EU decision, because the EU institutions must still decide on changes to the bloc's CO2 rules. Germany's final approval is still outstanding, and the SPD letter sets out the conditions attached to the ministers' support. Whether Brussels accepts the Franco-German draft remains unclear, as does the final wording. Spiegel and AFP both describe the paper as preliminary, so the details could still change.