Brussels. Chancellor Friedrich Merz (CDU) and French President Emmanuel Macron have agreed on a common position with which they want to weaken the EU-wide ban on internal combustion engines more than previously planned. Handelsblatt learned this from three insiders.
According to current EU law, the average CO2 emissions of newly registered vehicles would have to fall by 100 percent from 2035 compared to 2021. The fleet limit is zero grams of CO2 per kilometer, which would de facto be equivalent to a ban on combustion engines.
In December 2025, under pressure from Germany, the EU Commission had already proposed weakening the ban. Their proposal stipulates that CO2 emissions must fall by 90 percent by 2035. Manufacturers should be able to offset the remaining ten percent with low-CO2 European steel as well as e-fuels and biofuels.
Merz and Macron’s plan would go beyond the Commission’s proposal. They have agreed on the broad lines, but further details are still being negotiated, EU diplomats said.
According to information from the Handelsblatt, Germany and France are demanding a softening of a further ten percentage points without compensation. Together with compensation options, the reduction could mathematically amount to at least 80 percent. Car manufacturers were given greater leeway: they would be able to sell significantly more vehicles with combustion engines than under the previous Brussels plans.
The Commission proposal would mean that after 2035, 27 to 29 percent of new registrations would still have an internal combustion engine. If the regulations are further softened, the number of vehicles with combustion engines is likely to increase even further.
If Merz and Macron have their way, the interim target for 2030 should also be further relaxed: According to current EU law, new cars currently have to reduce their CO2 emissions by 55 percent by 2030 compared to 2021. Here too, the Commission's proposal already provided for relief: instead of a hard annual target, several years should be summarized. The Commission proposed a three-year period from 2030 to 2032.
According to the German-French proposal, manufacturers should be given five years: from 2028 to 2032. This is one of the core demands from the industry. Insiders assume that manufacturers can avoid high fines.
Germany is dependent on support from France because otherwise there would be no majority in the Council of Member States for the watering down. In return, Germany is accommodating France with the planned Industrial Accelerator Act (IAA), which is intended to set “Buy European” requirements for the auto industry.
Berlin is therefore ready to accept stricter “Made in EU” requirements for the auto industry. The federal government had previously pushed for the rules to be opened up as much as possible to trading partners such as Turkey, Vietnam and Morocco.
But France wants to make the new industrial requirements much narrower. According to Paris's will, European tax funds, such as purchase bonuses or other government subsidies for electric cars, should in future only flow for vehicles that were largely produced in the EU.
The proposed law to phase out combustion engines is also currently being negotiated in the EU Parliament - but so far without agreement. It would be possible for the EU Parliament to further expand the compensation options: by counting green steel and other materials such as green aluminum and recycled material in the amount of ten percentage points, plus a further ten percentage points for the use of e-fuels and biofuels. However, the EU Parliament could stick to the core goal of climate neutrality.
The reason for this is that after the state elections in Germany, the conservatives want to find a compromise in the middle without the right-wing parties in the EU Parliament. The aim is to reach an agreement in the Transport Committee in the next two weeks. This should then serve as a blueprint for the other committees. A vote on Monday evening has already been postponed.
FDP MP Jan-Christoph Oetjen insists on quick decisions because tens of thousands of jobs depend on it. “We liberals want real technological openness, where all technologies can contribute to climate protection,” he said. “We will measure the specific proposal against this.”
