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France and Germany agree on car industry plan linking European production and emissions

The two governments want stronger support for cars made in Europe alongside more flexibility on vehicle emissions. Their joint approach still needs wider EU agreement.

View of the Volkswagen industrial plant in Wolfsburg, Germany.
File photograph of the Volkswagen industrial plant in Wolfsburg, Germany, taken in 2006. User:High Contrast — VW Wolfsburg — High Contrast (resized and converted to WebP). CC BY 2.0 de.Image sourceImage licence: CC BY 2.0 de
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France and Germany announced on 16 October that they had agreed on a joint plan for Europe's car industry, pairing support for European vehicle production with more flexible emissions rules. The proposal could affect where future cars are made and how automakers meet climate targets, but it still needs agreement from other EU countries and the European Parliament before it can become law.

In a joint statement, the governments said they wanted to cut CO₂ emissions while helping Europe develop and manufacture the next generation of electric vehicles. Their approach calls for incentives for investment, research and development, production in Europe and resilient supply chains. It also calls for regulatory flexibility to reflect different market and technological conditions.

How the proposed car rules would change

POLITICO reported that the bargain links two priorities: Germany would accept stronger European-content requirements for the automotive industry in the proposed Industrial Accelerator Act, which France has sought, while France would support Germany's push to ease the planned 2035 vehicle emissions target. The content rules are intended to favor production in Europe; the governments have not set out their final scope or an implementation timetable.

Under the position described by POLITICO, automakers would have to cut emissions from new vehicles by 90% from 2021 levels by 2035, rather than 100%, without compensating for the remaining 10% through investments in alternative fuels. That differs from the European Commission proposal described by the outlet, which would allow 10% leeway tied to measures such as offsets and investments. These are competing proposals for EU rules, not rules already in force.

What carmakers and governments say comes next

German Chancellor Friedrich Merz called the agreement a ‘good day for car drivers and for jobs in Germany, France and Europe,’ according to DW. French President Emmanuel Macron said he hoped the Franco-German approach would quickly lead to an agreement with European partners. Their governments presented the plan as a way to maintain climate ambition while keeping car production and related jobs in Europe.

DW reported that Volkswagen welcomed the agreement while assessing its details. Hildegard Müller of Germany's automotive industry association, the VDA, called it an important step but said it fell short on jobs and climate and sought further measures. POLITICO reported that the announcement had been delayed by disagreements within Germany's governing coalition before the Social Democratic Party dropped its opposition.

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