France and Germany reach agreement on the future of the car industry

France and Germany have confirmed an agreement on the future of the automotive industry, aimed at preserving the European automobile sector amid growing challenges from international competitors. According to diplomatic sources and documents obtained by AFP, the two countries have reached a provisional deal that includes concessions on emissions standards and stricter definitions of “Made in Europe” manufacturing. The agreement was finalized ahead of a European summit and is expected to influence ongoing negotiations within the European Union. Under the terms of the agreement, France has made additional concessions on CO2 emissions for cars by 2035. This marks a departure from earlier proposals by the European Commission, which had called for a complete phase-out of internal combustion engines by 2035. Instead, the new framework allows for a 90% reduction in emissions by 2035, with no requirement to compensate for the remaining 10%. This adjustment is justified by the increasing use of renewable fuels, including biofuels, which can help reduce overall emissions. In return, Germany has accepted a stricter definition of the “preference for European products,” a policy that requires companies receiving public funds to source components manufactured within the European Union or certain partner countries. This measure is intended to protect European automotive manufacturing against rising competition from China and other global producers. The preference will apply primarily to the 27 EU member states and select close allies such as the United Kingdom, Norway, and Switzerland. The agreement is expected to facilitate progress on the EU’s broader automotive package and legislation related to the preference for European products, currently being negotiated between the member states and the European Parliament. To achieve this, France has granted additional flexibility for thermal vehicles, a move requested by Germany to safeguard its powerful automotive industry. The deal also includes provisions to relax a proposal from Brussels aimed at electrifying corporate fleets. It calls for the inclusion of certain low-emission internal combustion vehicles alongside electric vehicles. Additionally, the mechanism of “supercredits,” previously reserved for smaller, more affordable electric vehicles, will now extend to larger electric models. Germany had long advocated for a broader interpretation of “Made in Europe,” encompassing many countries beyond the EU. However, it has ultimately accepted stricter criteria focused on the EU itself and its closest partners. Including the UK in the definition of “Made in Europe” sends a signal to London before the upcoming EU-UK summit scheduled for November 20 in Brussels. According to a draft document reviewed by AFP, the agreement outlines a compromise between ambitious climate goals and the realities of the automotive market. Both countries emphasize the need for rapid and simultaneous adoption of these texts within EU institutions. The Alliance of Automotive Manufacturers and Traders (ACEA) has urged acceleration of negotiations, hoping for approval by early 2027. Environmental organizations regularly criticize the concessions made to the automotive industry at the expense of ecological goals. Meanwhile, experts argue that relaxing strict emissions standards could be counterproductive or even detrimental to the European automotive industry during a period of intense competition in the shift toward electrification.