France and Germany could reach a compromise on EU car emissions targets, linking a reduction in the 2035 CO₂ requirement to new Made in EU rules for the automotive industry.
EU car emissions targets: Brussels could take another step backwards
A dinner bringing together French President Emmanuel Macron, Volkswagen CEO Oliver Blume, Renault CEO François Provost, Stellantis Chairman John Elkann and CEO Antonio Filosa brought some of the most influential figures in Europe’s automotive industry around the same table. At stake was the future of the continent’s most important heavy industry, increasingly threatened by large-scale Chinese car exports and persistent uncertainty over EU policymaking in Brussels.
Paris, the city of agreements
The 2026 Paris Motor Show provided the occasion. On the evening before the event opened, Blume delivered a speech on the future of his group, Europe’s largest car manufacturer. This was followed by a dinner at the Élysée Palace attended by leading automotive executives and, subsequently, a visit by Macron, Elkann and Filosa to the motor show, where they stopped at the extensive Stellantis stand.
As investigators often say, several clues can amount to evidence. After all, Renault, Volkswagen and Stellantis together account for more than 60% of European car production.
Indeed, persistent rumours reported by several newspapers suggest that France and Germany, Europe’s two leading car-producing countries, have reached an agreement that could break the current deadlock within the European Union.
Two issues of vital importance to the industry are involved, as part of a genuine political and industrial trade-off.
EU car emissions targets: could the 2035 requirement fall to 80%?
This is the real news.
If France, which is ahead in electric vehicle production and has achieved a reasonable level of adoption on its roads, were to accept a relaxation of the 2035 car CO₂ emissions reduction requirement to 80%, compared with the current 90% and the original 100%, Germany would be prepared to approve the European proposal to introduce a Made in EU label for vehicles manufactured in Europe using components produced in Europe.
In return, Brussels would grant the public subsidies that the industry needs.
According to several analysts and media outlets, including POLITICO Europe, only a few technical details remain to be finalised. An announcement could therefore be imminent.
Speaking at the POLITICO Competitiveness Summit in Paris, European Commissioner for Industry Stéphane Séjourné suggested that the compromise between France and Germany, with no apparent involvement from Italy, could overcome the current political deadlock, particularly within the European Parliament.
This would accelerate the approval of new legislation concerning supply chains and Made in Europe requirements.
The objective is, of course, to defend the competitiveness of the EU automotive industry against the rapid expansion of Chinese manufacturers.
Chinese carmakers have already been asked to halve their exports of hybrid and plug-in hybrid vehicles to Europe.
Electric car targets: China goes on the offensive
China, however, is certainly not standing still.
On the contrary, the speed at which Chinese manufacturers make decisions and put them into practice already appears capable of overcoming potential restrictions on production within Europe.
How?
Chinese carmakers are already building manufacturing plants and supply chains in Europe, thereby circumventing potential restrictions and tariffs.
By producing vehicles locally, they would create jobs for European workers while strengthening their presence on the continent under their own brands.
This would, however, mean competing on a more equal footing. European wages are not the same as Chinese wages, meaning that production costs would be adjusted accordingly.
Unprecedented production capacity
One concrete example comes from Changan Automobile.
“We are committed to developing our local production capacity and exploring the opportunities available in this region,” the company stated at the Paris Motor Show.
The Chinese manufacturer plans to produce 180,000 vehicles annually in Europe by 2028, rising to 350,000 by 2030.
Its first European-made vehicle is expected to be ready as early as 2027, even before the EU’s local-content requirements come into force.
Europe risks scoring an own goal
If all this proves to be true, and Brussels agrees to reduce the 2035 requirement to an 80% reduction in car CO₂ emissions, thereby weakening the intended reduction in climate-altering and polluting emissions, it would be yet another sign of the European Union’s inability to make forward-looking decisions.
It would demonstrate once again that the institution representing the 27 Member States is unable to uphold the objectives it has set itself, or to effectively guide the economies of its Member States and, consequently, the lives of their citizens.
