France and Germany strike deal to further weaken EU combustion engine phaseout – media

France and Germany have agreed to push for a further weakening of the EU’s planned phaseout of new combustion engine cars, a deal that could break a months-long deadlock among member states, business daily Handelsblatt and newspaper Frankfurter Allgemeine Zeitung reported. In exchange for French support on cars, Germany will back France’s demands for strict “Buy European” rules favouring EU-made products in public subsidies and tenders, Handelsblatt wrote, citing three unnamed sources.

Chancellor Friedrich Merz and president Emmanuel Macron are expected to present the agreement before EU leaders meet in Brussels on 15 October, according to the reports. Until now, the two governments had blocked each other. The German government wanted looser rules for carmakers but rejected “Buy European” requirements, while France wanted the opposite. 

France and six other countries (Sweden, Spain, Denmark, Luxembourg, the Netherlands and Portugal) had formed a blocking minority among member states against diluting the rules beyond what the European Commission had proposed, so France switching sides would likely secure the necessary majority, according to the reports.

At the end of last year, following pressure from Germany, Italy, and carmakers, the Commission already proposed lifting the EU's effective ban on the sale of new combustion engine cars from 2035 at the end of last year, cutting the target for new cars' CO2 emissions to 90 percent below 2021 levels instead of 100 percent. Carmakers could continue selling plug-in hybrids, range extenders and conventional cars after 2035 if they offset the remaining emissions by using low-carbon steel made in the EU, or with e-fuels and biofuels.

EU diplomats told Handelsblatt the Franco-German agreement would go beyond the Commission proposal. The two countries now demand a further weakening by an additional ten percentage points to 80 percent without additional compensation, wrote Handelsblatt. Carmakers would thus be allowed to sell many more combustion engine cars than under the existing proposal. Merz and Macron also agreed to further weaken the 2030 intermediate target of reducing fleet emissions beyond the commission proposal, by giving carmakers a five-year period to achieve a 55 percent reduction versus 2021, instead of the three years (2030 to 2032) proposed by the Commission. Industry insiders told the newspaper that this proposal would allow carmakers to avoid hefty fines.  

The 2035 ban was agreed in 2023 to bring down stubbornly high emissions in the transport sector as the EU moves towards its target of becoming climate-neutral by 2050. But Germany, home to Volkswagen, BMW and Mercedes-Benz, has lobbied hard for more flexibility, arguing that its carmakers need more time because they are struggling with Chinese competition and US tariffs.

Clean transport group Transport & Environment (T&E) has warned that the Commission's proposal alone would lower the share of battery-electric cars in 2035 new car sales to around 85 percent, and that car CO2 emissions between 2025 and 2050 would be about 10 percent higher than under the current rules.