Franco-German auto sector deal: EU ‘green’ targets eased to boost the sector

Brussels –No backtracking on electric and clean mobility, but with less stringent and more flexible targets to avoid jeopardising the sector’s competitiveness: France and Germany have reached an agreement to revive the automotive sector, which involves a political and industrial alliance with the United Kingdom. The Franco-German initiative undermines the European Commission’s efforts in this sector by scaling back EU emissions standards to safeguard the “Made in Europe” status of the automotive industry; this is the key element of the agreement.

This involves taking a few steps back from sustainability ambitions to ensure that the industry does not lose market share. The political agreement is also supported by the stance adopted by the heads of state and government of the European People’s Party (EPP) family, who – in the name of competitiveness – have called for less stringent reforms to environmental regulations, specifically regarding cars and the Green Deal.

Germany and France, the eurozone’s two largest economies, both with major automotive industries, have also agreed to include the United Kingdom in their automotive strategy, to strengthen the industry and enable investment in European products. This is another key aspect of the Franco-German agreement: Paris wanted clear commitments to tackling climate change and cutting emissions, while Berlin was pushing for a broader interpretation of “made in Europe” to open the door to further industrial partnerships and allow greater flexibility on “green” targets. The agreement, in its provisional form, now only needs to be finalised. 

The Franco-German agreement vs EU rules, and the rift with the Commission

EU rules, as revised by the European Commission at the end of 2025, no longer require the car industry to achieve a 100 per cent reduction in emissions by 2035 for new registrations – thereby phasing out combustion engines – but rather a 90 per cent reduction, with the remaining 10 per cent to be offset through recycled or low-carbon steel, or alternative fuels. The Franco-German plan for the automotive sector, on the other hand, would retain the 90 per cent emissions cut by 2035, but without the need for further compensatory measures. This less stringent target is broadly in line with the demands of German car manufacturers. 

“We want to successfully manage the transformation of our automotive industry, adhere to our climate targets, and ensure that the cars of the future are produced in Europe,” according to a joint statement by France and Germany. This shows how the two countries are making a clear break with the European Commission, with France and Germany taking its place: “This balanced approach enables the European Union to pursue its climate targets while simultaneously strengthening the technological sovereignty, industrial base, and international competitiveness of its automotive industry.” 

With the agreement reached, the joint statement continues, “we aim for a significant reduction in CO₂ emissions while simultaneously strengthening Europe’s capacity for the development and production of the next generation of electric vehicles.” Hence, the emphasis that upends the von der Leyen team’s agenda, in line with directions from Paris and Berlin: “‘European preference’ means that the transition to clean mobility must go hand in hand with investment, innovation, and production in France, Germany, and across Europe.”