It has been ten months since the European Commission presented its proposals to weaken the ban on combustion engines. The Industrial Accelerator Act followed seven months ago, introducing “Made in EU” requirements for state funding programs and tenders. Both projects are intended to help the automotive industry. The first law is intended to give the industry more time to convert to electromobility; the second is intended to protect them from competition from third countries, especially from China.
However, both laws have not made much progress in the legislative process since they were presented. Germany and France are blocking each other. Berlin wants to abolish the ban on combustion engines, but not “Made in EU” requirements. In Paris it's the other way around. According to information from the F.A.Z., a joint position paper from Germany and France should now change and clear the way for both laws. President Emmanuel Macron's Chancellery and the Élysée Palace are working hard on the paper.
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The plan is for Chancellor Friedrich Merz (CDU) and Macron to present the paper before the EU summit at the end of next week. The idea is simple: Macron gives up his resistance to the relaxation of fleet limits for cars. To do this, Merz is moving away from resistance to overly strict “Made in EU” requirements. Both could score points with the home crowd. Macron with the protection of jobs and his favorite topic “Made in EU”. Merz would have deprived the AfD of an important election campaign issue.
Franco-German agreement could break the blockade
The deal would clear the way for an agreement in the Council of Ministers. If France no longer prevents the ban on combustion engines from being weakened, the necessary majority should be in place. So far, France is leading a group of seven states that are opposed to a major dilution. Spain and the Netherlands are also included. The seven states have the necessary votes for a blocking minority. The debate about the Industrial Accelerator Act (IAA for short) is currently not making any progress in the Council of Ministers because of the different positions on “Made in EU”.
In addition, the German-French agreement could also solve the blockade on the ban on combustion engines in the European Parliament, or at least that is the hope. The Greens and Social Democrats as well as Christian Democrats and parts of the Liberals face each other there. A right-of-center majority in favor of a significant relaxation of the CO₂ requirements for new cars would be possible. However, the group leader of the Christian Democratic EPP, Manfred Weber (CSU), wants to avoid voting with the AfD after the recent state elections.
Against this background, a vote in the EU Parliament's Transport Committee scheduled for Monday was initially postponed. At the same time, time is running out. If possible, the end of the combustion engine ban should come at the beginning of the year - before the European super election year of 2027 really begins. At the IAA, the European Parliament and the Council of Ministers even agreed to complete it by the end of the year.
Positive signals from the Social Democrats
There are at least positive signals coming from the Social Democrats about the planned Franco-German deal. “A council agreement would help if it builds a bridge to protecting jobs in the EU,” says SPD MEP Tiemo Wölken. CDU MP Jens Gieseke, who is responsible for the transport committee, is more reserved. “A cross-solution can help,” he says. But you shouldn't make things too complicated either.
In fact, the devil is in the details. Last year, the European Commission proposed lowering the CO₂ reduction target for new cars in 2035 from 100 percent to 90 percent compared to 2021. But she made this subject to conditions. The gap created by the lower target should be made up for by using green steel for cars and fueling combustion engines with renewable fuels.
This didn't go far enough for the federal government to be able to talk about a real end to the combustion engine. She therefore called for further weakening in the spring. The target could be to end up at 90 percent without conditions. However, much more extensive cuts are also being discussed in the European Parliament. The rapporteur responsible for the dossier, the Italian EPP MP Massimiliano Salini, is in favor of a 73 percent target. He wants to fill the gap of up to 90 percent with green steel, e-fuels and biofuels.
What price is Macron asking for his approval?
The parties on the right want to lower the target to 70 percent and waive further requirements. There is also the important question for the car companies as to whether they have to achieve their goals annually, as previously planned, or only on a five-year average. This could save them from having to pay high fines.
On the other hand, there is the price that Macron is demanding for his agreement to weaken the ban on combustion engines. The Commission's proposal for the IAA provides for the EU's trading partners to be treated equally to EU suppliers when it comes to "Made in EU" requirements under certain circumstances. But the hurdles are said to be higher for electric cars. The Brussels proposal can be read as meaning that only the 27 member states are eligible as suppliers of important components.
The federal government has so far pushed for the “Made with EU” approach. She wants to involve as many trading partners as possible. The impression that the EU is isolating itself should be avoided at all costs. Economics Minister Katherina Reiche (CDU) is primarily responsible for this. Is Berlin now moving away from this? And does that only apply to electric cars? Or will Merz let Macron pressure him to follow the French course for other industries too?
