Germany and France agree to ease EU internal combustion engine ban

According to the news of the German economic newspaper Handelsblatt, negotiations on the details of the plan to relax the internal combustion engine ban, which has been generally agreed upon between Paris and Berlin, continue.

Current EU legislation stipulated that carbon dioxide emissions of new vehicles would be reduced by 100 percent by 2035, meaning a complete ban on internal combustion engines. The EU Commission had previously proposed to reduce this target to 90 percent.

Merz and Macron's new plan goes beyond this proposal and demands that the emission reduction target be reduced by 10 points without any balancing requirement.

With balancing options, the emission reduction rate can be reduced to 80 percent. This would give manufacturers the flexibility to sell many more internal combustion engine vehicles than under Brussels' current plans.

Loosening the current intermediate targets is also on the agenda. While under normal circumstances emissions should be reduced by 55 percent by 2030, the new proposal requests that producers be given a wide 5-year transition period between 2028 and 2032 to avoid criminal sanctions.

Germany needs the support of France to gain the necessary majority in the EU Council.

According to Handelsblatt's report, Berlin is preparing to make concessions regarding France's protectionist industrial policies in return for this support.

Accordingly, Germany will accept strict "EU Origin" regulations under the Industrial Acceleration Act (IAA), which imposes the "Buy European" requirement in the automotive industry.

In line with France's request, state subsidies for electric vehicles will in future only apply to vehicles produced largely within the EU.

Meanwhile, the European Parliament (EP) Transport Committee is expected to prepare a draft consensus on the issue within the next two weeks.