France and Germany are in advanced talks on a grand bargain to redraw Europe's car policy, aiming to soften emissions rules while favoring EU manufacturers in public contracts. The negotiations address the European Commission's proposals on the combustion engine phaseout and requirements for cars to benefit from public funding. However, profound differences over Brussels' "Made in Europe" proposals are complicating discussions. Germany seeks to relax CO2 standards in 2030 and accommodate alternative fuels, while France pushes for flexibilities that reward investment in Europe. A German position paper advocating for free-trade partner goods in the Industrial Accelerator Act contrasts with France's demand for an EU27 approach. Beyond automotive policy, the article notes European steel production hitting historic lows due to energy costs and Chinese oversupply. Separately, Spain's former foreign minister warns that immigration is a "political tomb" for European governments attempting to compete with rightwing populists, arguing that governments will always face tougher opponents.
\n\nEuropean carmakers face a critical period as they navigate slow demand and Chinese competition. The talks could significantly impact the sector's future, potentially softening emissions targets for 2030 and 2035 while protecting corporate fleet greening goals. The outcome depends on bridging the divide between German industry priorities and French investment requirements within the broader automotive package framework.
Source: Financial Times Companies · Summarized by HeadlinesBriefing