ROME – France and Germany are choosing to take the path of a more gradual transition to electric without completely eliminating the combustion engine. And they announced an agreement on the future of the European automotive sector which aims to give a clear direction to the negotiations in Brussels, without derailing the industry. The agreement, made official with a joint declaration after the meeting between Emmanuel Macron and Friedrich Merz, aims to balance two objectives that are often in tension: the decarbonisation of cars and the competitiveness of European production, with the protection of the supply chain and jobs. The sector is worth between 7 and 8 percent of GDP and 13 million workers, both direct and indirect.
The most significant change concerns the emissions targets for 2035. The Franco-German proposal envisages adjusting the objective so that Europe achieves an effective reduction of 90% of CO₂ compared to the reference level, but without compensation from manufacturers. There remains a 10% share of residual emissions, linked to the use of renewable fuels in the fleet; also on this point the agreement establishes that this share will not have to be compensated by the producers. In essence, we try to make the climate trajectory realistic, taking into account how much the use of cleaner fuels could change in the market.
Emmanuel Macron, French president, presented the agreement as a way to "get the transition off the ground" without hitting the industry, aiming for credible European rules and support for the supply chain. “We have reached an agreement with Germany to secure the future of the European automotive sector. We are driven by a clear ambition: to successfully transform our automotive industry, while maintaining our climate goals and our production in Europe,” he wrote on partners, for the benefit of our jobs and our industry. Europe must be a continent that innovates, invests and produces, while protecting the climate and safeguarding our jobs: this is the aim of our commitment", he concludes. German Chancellor Friedrich Merz hailed it as a "good day" for the European automotive industry and for employment in Germany, France and Europe. "We have agreed on a package in favor of freedom of choice, technological openness and respect for climate objectives. This is an investment signal for the industry."
CO₂ target for 2035: “90%” and no compensation
One of the most discussed points concerns car emissions. According to the Franco-German proposal, in 2035 the European Union should aim for a 90% reduction in CO₂ emissions compared to the reference level, without compensation mechanisms for producers.
Furthermore, the idea of leaving 10% of residual emissions remains, linked to the use of renewable fuels in the circulating fleet. But, and this is a key step: that residue should not fall on builders with compensation obligations.
Emission values on multi-year averages
The agreement also introduces elements of flexibility on the approach tapes. Multi-year calculation periods are envisaged (between 2030 and 2031) for the average of emissions, as well as a credit banking mechanism: those generated in 2029 alone can be used up to a maximum of 7 grams of CO₂ per kilometer per producer. Furthermore, for light commercial vehicles, a five-year average on the 2025 objective is envisaged, to avoid too abrupt jumps between one production and measurement cycle and another.
Longer times for plug-ins
On the technology front, the agreement also pays attention to plug-in hybrids. For PHEVs, the current utility factor is maintained, introducing a more rigorous parameterization based on empirical data, modifying the estimate of the electric autonomy and actual use of the battery until 1 January 2030, provided they have a minimum electric autonomy of 80 km. After that date, the metrics will be updated annually based on real-world usage data, not just standard assumptions.
New category of zero-emission vehicles
One of the steps that confirm the desire to open more avenues to innovation is the creation of a new category for zero-emission vehicles powered exclusively by renewable and low-carbon fuels produced in Europe. The objective is to allow, even after 2035, the registration and use of solutions powered by clean fuels, in order to maintain freedom of choice consistent with the technological transition.
Super credits and Made in Europe at 70%
Alongside the climate targets, the agreement strengthens the industrial component with rules linked to "made in Europe". The so-called "Super credits" are foreseen for battery electric vehicles produced in the EU, with differentiated multipliers: 1.2 for BEVs produced in Europe and 1.4 for small ones. There are also more favorable criteria if vehicles integrate low-carbon European steel and aluminium, with multipliers rising to 1.3 and 1.5 respectively. The super credits would apply from the entry into force of the package, scheduled for 2027, and would continue beyond 2035.
Precisely because it is also about industrial policy, the agreement defines progressive criteria on local content between 2028 and 2034 and establishes that public incentives, purchasing aid and public procurement will be reserved exclusively for vehicles compliant with "Made in Europe" requirements. Among the elements required are: a minimum share of local components (at least 70% excluding the battery), rules on batteries and cathode materials, a significant share of research and development done in the EU.
Finally, for company fleets, a replacement of the rigid constraints with indicative national objectives for the transition to Zev and Zlev vehicles is indicated. The message coming from Paris and Berlin is that of a "considered" trajectory: pushing for electromobility and climate protection, but without introducing too rigid bans that risk damaging a strategic industry. Now the decisive step remains: convincing the other member states and the European Parliament, so that the agreement becomes an effective rule.
Now what happens
Even with the agreement between France and Germany, to make everything a reality, the following will be needed: the consensus of the other EU countries, the approval of a proposal by the European Parliament and then the adoption of a final text after the discussion between the Commission, Parliament and Commission, the so-called trilogue, probably at the beginning of 2027 both on the modification of the rules on the transition towards electric and with regard to Made in Europe which is contained in the Industrial Acceleration Act.
