France and Germany have agreed on a new European car policy that scraps the 2035 climate neutrality target for the sector. The deal keeps new combustion engine cars on the road well after 2035 and promotes renewable fuels. German Chancellor Friedrich Merz and French President Emmanuel Macron hailed the agreement as a boost for European manufacturing.
The deal also restricts public subsidies to cars made in the EU, the UK, and the EEA, excluding other partners. It replaces the European Commission’s proposed 90% CO₂ reduction target with more flexible rules for plug-in hybrids and fleet emissions. The agreement follows months of deadlock and reflects a shift away from strict climate targets in favor of industrial competitiveness.
EV sales in the EU rose 45% this year, reaching 22% of new car sales. Renault CEO François Provost affirmed continued investment in electric vehicles while calling for pragmatic regulation. The deal now awaits approval from the European Commission and other EU member states.
Source: Financial Times Companies · Summarized by HeadlinesBriefing