Germany and France propose that manufacturers will not have to offset the remaining 10% of their CO2 emissions by 2035. Thus, they could continue selling petrol and diesel cars if they meet the average fleet requirement.
Germany and France have agreed that manufacturers will reduce their average CO2 emissions by 90% by 2035 and will not have to offset the 10% remaining. According to Ecosistema Startup, until now Brussels required that this residue be neutralised with synthetic fuels or green steel.
The German Chancellor Friedrich Merz announced the agreement after the European Council on Friday. Italy had already indicated that it would support such a measure, meaning the joint position includes three major producers on the continent.
In practice, new petrol and diesel cars will still be sold after 2035, provided that each manufacturer's average fleet meets the limit. The European Commission had already suggested in December 2025 to review the zero-emission target.
The 2025 regulation set fines of 95 euros for each gram of CO2 exceeded per vehicle sold, with a limit of 93.6 grams per kilometre. With these figures, a manufacturer selling a million cars and exceeding the limit by 10 grams would face a penalty of 950 million euros.
The Volkswagen Group had an exposure of 1.5 billion euros. A last-minute agreement maintained the limit but calculated it based on the fleet sold between 2025 and 2027.
The December 2025 agreement had already reduced the 2035 target to 90% and opened the door to plug-in hybrids, synthetic fuels, and hydrogen. The original zero-emission target was agreed upon in 2023.
France also requests that, from 2028, cars receiving public aid be assembled in European territory and generate at least 70% of the value of their components, excluding the battery. The text also proposes to extend supercredits to all electric vehicles manufactured in Europe.
The agreement would also cover Norway, Iceland, Switzerland, and the United Kingdom, whose products would be considered Made in Europe.
To unblock the regulation, 15 of the 27 member states are needed, representing at least 65% of the population. France, Sweden, Spain, Denmark, Luxembourg, the Netherlands, and Portugal formed a blocking minority against diluting the targets, and Paris's change of stance could be enough to achieve a majority.
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