France and Germany agreed on Friday to soften proposed European Union car emissions rules and support the inclusion of Britain in the bloc’s planned ‘Made in EU’ framework, in a compromise aimed at protecting the competitiveness of Europe’s automotive industry.
Under the European Commission’s proposal, automakers would have to reduce carbon dioxide emissions from new cars by 90 per cent from 2021 levels by 2035. The remaining 10 per cent would be offset through measures such as using low-carbon steel and alternative fuels.
The Franco–German plan would retain the 90 per cent reduction target but remove the requirement for additional measures to compensate for the remaining emissions. The approach broadly reflects the preferences of German carmakers.
The agreement also addresses proposed EU rules requiring local content and lower carbon emissions for products purchased through public procurement, public auctions and subsidy programmes.
France has advocated restricting eligibility to products manufactured within the EU. Germany and several other member states have argued that the scheme should also cover countries closely integrated into European supply chains and partners with free-trade agreements.
Under the Franco–German proposal, the automotive sector’s ‘Made in EU’ designation would cover the bloc’s 27 member states and other European partners that were part of the EU single market on 1 January 2020. This would include Britain, which left the single market at the end of that year.
Volkswagen, Europe’s largest automaker, welcomed the compromise, saying it would allow the industry to contribute to climate protection without undermining its competitiveness. The company also said the proposed local-content rules would encourage production and investment in Europe.
‘Inclusion in the scheme could benefit the UK automotive sector’
A representative of British Prime Minister Andy Burnham’s office said inclusion in the scheme could benefit the UK automotive sector. However, the official cautioned that the proposal would require broader European support and that its details had not yet been fully assessed.
The Franco–German plan would make participation conditional on full reciprocity, alignment with EU requirements for investment from third countries and compliance with the bloc’s trade defence measures. This could require Britain to adopt EU measures restricting imports of Chinese-made hybrid and battery-electric vehicles.
Renault Chief Executive François Provost said Britain should be included because it was part of Europe’s automotive ecosystem. However, he argued that the UK should also abandon its separate electric vehicle sales mandate and adopt the same rules as the EU.
‘The two automotive industrial policies should be consistent,’ Provost said.
The Franco–German document also calls for multi-year compliance periods for car emissions targets, no revision before 2030 of the utility factor used to estimate the share of hybrid vehicle journeys powered by electricity, and recognition of vehicles running on renewable and low-carbon fuels as zero-emission vehicles.
German Chancellor Friedrich Merz described the agreement as ‘a good day for motorists and for jobs in Germany, France and Europe.’ He added that Italy largely supported the proposals.
Not all automakers agree on how broadly the ‘Made in EU’ framework should apply. Toyota’s European division, which sells vehicles manufactured in the EU, Britain, Turkey and Japan, said that including partners such as Britain, Canada, Japan, South Korea and Turkey would give European manufacturers the scale needed to compete with China.
Turkey’s trade minister has also argued that trusted partners such as Turkey should not be excluded from the scheme.
Environmental groups and Green politicians criticized the proposed changes to emissions policy. German Green lawmaker Swantje Michaelsen accused the government of holding back the automotive industry at a time when high fuel prices were accelerating demand for electric vehicles.
Anna Krajinska of the transport campaign group Transport & Environment described the agreement as a ‘historic mistake’, arguing that it would weaken incentives for carmakers to invest in electric vehicles.
German and French leaders say they are acting to protect jobs, Krajinska said, but warned that the agreement could ultimately damage Europe’s automotive industry.
France and Germany must secure support from other EU member states and the European Parliament before the proposals can take effect. A final common text is unlikely before early next year, following a planned EU–UK summit on 20 November.
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