France joined Germany in pushing to soften the EU's 2035 combustion-engine phase-out, with Chancellor Friedrich Merz and President Emmanuel Macron aligning on a revised CO2 trajectory in return for German flexibility on Buy European procurement rules.

The bilateral understanding, reported this week, brings the bloc's two largest vehicle-producing member states into a common position. Germany had already moved toward revising the 2035 fleet CO2 step, which under existing EU rules requires a 100% emissions reduction for new cars and vans — a level that effectively outlaws new combustion-engine sales. Paris's pivot converts that German opening into Franco-German consensus ahead of the next Council review.

What does the alignment actually change?

The political effect is to lower the cost of amending the post-2027 trajectory in Brussels. Carmakers facing penalties for every gram of fleet overshoot have lobbied for years to soften the cliff-edge nature of the 2035 step and to recognise the still-dominant share of hybrid and plug-in hybrid sales in the European mix. A unified German-French position makes it harder for any single member state to block a technical revision.

The practical effect for suppliers depends on the shape of the revised pathway. Battery cell makers in France and Germany have committed gigafactory capacity on a steepening CO2 slope from 2027 to 2030. E-drive and e-axle vendors have built order books on the same assumption. A softer slope extends volume on power-electronics and hybrid-transmission lines but cuts pull-through on cells already coming online.

What is France buying with Buy European?

Germany's accommodation covers Paris's long-standing demand that suppliers meet local content thresholds before accessing French state-supported EV incentive programs. The rules, championed by Paris, are intended to anchor battery and powertrain production inside the EU as Chinese volumes compete in the entry-level segment. Berlin's flexibility removes a point of friction that had previously split the two capitals on industrial policy.

For French suppliers, the deal underwrites continued public investment in Renault's electric powertrain programs and in Stellantis's battery and e-axle operations. The Buy European content thresholds, if written into national incentive rules, would also benefit French tier-1s competing for contracts on EU-made EVs.

What to watch next

The European Council's next scheduled CO2 review is the immediate test. Italy, Poland and Spain, each with significant ICE-supplier workforces, want an even softer trajectory and will judge whether the Franco-German framework goes far enough. The European Parliament must agree to any revision; the Greens and parts of the EPP remain split on transition credit for hybrids.

Concrete milestones to track: the next Council conclusions on fleet CO2, the Commission's working paper on a revised 2035 pathway, and year-end 2025 EU vehicle registrations — the latter will indicate whether the existing 100% reduction target is feasible without legislative amendment.