Catch up on the essentials
- The pact is the two governments' compromise after months of public disagreement over climate ambition versus industrial competitiveness, and it still requires approval from other EU member states and the European Parliament before becoming binding policy.
- The agreement makes it easier for carmakers to meet a proposed EU target requiring a 90% cut in new-car exhaust emissions from 2021 levels by 2035, by adding "regulatory flexibility" to reflect differing market and technology conditions.
- Other member states' reactions, particularly from Italy, Spain and the Nordic bloc, will determine whether the deal clears the Council in its current shape.
Selected from this article · 2026-10-16
Read on for the full pictureA bilateral fix for Europe's auto squeeze
France and Germany confirmed a joint deal on 16 Oct 2026 to safeguard Europe's automotive sector, agreeing to ease the EU's proposed 2035 CO2 target for new vehicles and to narrow "made in Europe" public procurement rules to the bloc's 27 members, with an opt-in pathway for Britain and Norway under stated conditions. The pact is the two governments' compromise after months of public disagreement over climate ambition versus industrial competitiveness, and it still requires approval from other EU member states and the European Parliament before becoming binding policy.
What the deal changes on emissions and procurement
The agreement makes it easier for carmakers to meet a proposed EU target requiring a 90% cut in new-car exhaust emissions from 2021 levels by 2035, by adding "regulatory flexibility" to reflect differing market and technology conditions. On procurement, Berlin won a broader interpretation of "made in Europe" content in principle, but the final text limits the scheme to EU countries with a narrow opt-in for non-EU partners, preserving France's push to keep the program inside the bloc.
Industry scale and the political stakes
The two governments framed the package as a way to defend a sector that accounts for 13 million jobs and roughly 7% of EU GDP, linking decarbonisation to incentives for investment, R&D, European production and resilient supply chains. Because France and Germany together carry the bulk of the EU's automotive economic weight, their joint position is likely to frame the Council debate even though unanimity is not required, leaving the European Commission's original proposal and Parliament's response as the next pressure points.
The next verifiable checkpoint is whether the European Commission formally tables a revised 2035 emissions proposal and a "made in Europe" procurement text aligned with the Franco-German compromise, and how the European Parliament responds. Other member states' reactions, particularly from Italy, Spain and the Nordic bloc, will determine whether the deal clears the Council in its current shape.
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