Germany and France have agreed to push for a major rollback of the European Union’s planned 2035 restrictions on new gasoline and diesel vehicles, arguing that Europe must protect its automotive industry, jobs and competitiveness while pursuing emissions reductions. The agreement, announced Friday, October 16, would allow combustion-engine vehicles to remain on the new-car market beyond 2035.

Under the Franco-German proposal, automakers would be required to reduce average carbon dioxide emissions from new cars by 90% compared with 2021 levels by 2035, rather than reaching the effective 100% reduction envisioned under the European Commission’s plan. Manufacturers would no longer have to offset the remaining 10% through measures such as using low-carbon steel or alternative fuels.

The agreement marks a significant shift in the debate over the EU’s climate rules. Germany has long opposed a strict phaseout of new combustion-engine vehicles, citing the importance of its automotive sector. France had previously pushed for stronger requirements favoring European-made products, but the two governments have now linked greater flexibility on emissions rules to policies intended to strengthen domestic manufacturing.

German Chancellor Friedrich Merz welcomed the agreement, describing it as “a good day for motorists and for jobs in Germany, France and Europe.” The proposal is intended to give automakers greater flexibility as they navigate the transition toward electric vehicles while facing competition from overseas manufacturers.

The plan also includes proposed requirements to increase European manufacturing in the automotive supply chain. Under the agreement, at least 70% of vehicle components, excluding batteries, would need to be produced in Europe, while 10% of battery content would have to come from European sources. The countries also want Britain to qualify as a trusted partner under the EU’s proposed “Made in EU” rules, potentially giving British manufacturers access to certain benefits.

The proposal has drawn criticism from environmental advocates, who argue that weakening the emissions framework could undermine investment in electric vehicles and slow the transition away from fossil fuels. Supporters of the changes counter that rigid mandates risk damaging European manufacturers and making it harder for them to compete internationally.

The agreement does not immediately change EU law. Germany and France must secure support from other member states and the European Parliament before the proposed changes can take effect. Negotiations are expected to continue in the coming months, leaving the future of Europe’s 2035 vehicle rules unresolved.