France and Germany have agreed on a joint position for the future of Europe’s car industry, but they have not changed EU law on their own. Their proposal would give manufacturers more flexibility after 2035 and would favour vehicles and components made in Europe when public subsidies or public procurement are involved. The text still needs to be negotiated and approved at EU level.
What the current rule says
The EU adopted a 100% tailpipe-emissions reduction target for new cars and vans registered from 2035 in 2023. The European Commission’s Automotive Package, presented in December 2025, sets out a proposal for a 90% tailpipe reduction from 2035. Under that proposal, the remaining 10% would be compensated through low-carbon steel made in the Union or through e-fuels and biofuels.
The proposal is not the same as a completed law. The European Parliament and the Council of the EU still have to negotiate and approve it. The Franco-German statement of 16 October 2026 is a shared political position designed to move those negotiations forward. It does not automatically legalise every petrol or diesel model after 2035.
The difference matters because fleet targets apply to a manufacturer’s average new-car emissions. A company might retain selected hybrid or combustion models if the final fleet calculation and the final technology conditions allow it. That would not mean every petrol or diesel vehicle could continue without limits. The exact rules for credits, compensation and the treatment of different powertrains will depend on the text that is eventually adopted.
Germany’s side of the compromise
Germany has been asking for more regulatory flexibility. Environment minister Carsten Schneider said manufacturers should receive more room in their CO2 figures so they can invest in electric mobility and European production. He also said the goal is for electric cars to be built in Europe rather than only in China.
That position is not a rejection of electrification. The German government’s joint statement keeps the goal of substantial CO2 reductions and says Europe should strengthen its ability to develop and manufacture the next generation of electric vehicles. The argument is about the route to the target: Germany wants a broader set of technical options and more time for industrial investment.
Berlin also supports a stronger European preference in public support and public procurement. The official wording concerns access to state-backed measures, not a direct ban on Chinese brands. A Chinese manufacturer building a vehicle in Europe could be treated differently from a vehicle imported from China, but the final criteria have not been fixed by the EU.
France’s priorities
France is pushing for a strict definition of “Made in Europe”. The French Directorate-General for Enterprises says Paris wants a framework limited to the EU27, with more than 70% European components and a European-made battery. This is France’s negotiating position, not a requirement already applicable across the Union.
The French government links the proposal to the country’s own market and industrial policy. It reports that electric vehicles accounted for 30% of French sales during the first part of 2026 and 42% in September. It also says 26% of electric vehicles sold in France in 2026 were built in France, while the share of electric cars assembled outside Europe fell to 16%.
Those numbers describe France and cannot be treated as EU-wide figures. They also do not show that all Chinese cars would be excluded from Europe. A condition for subsidies or public tenders is different from a general import or sales ban.
What it could mean for Chinese brands
Chinese manufacturers are affected indirectly through possible rules on production location and component origin. A car assembled in China with a battery and supply chain largely based in Asia might not qualify for some public support if the final scheme requires European production. A Chinese company with European assembly and battery operations could potentially meet some of the criteria, depending on the adopted framework.
That would not automatically change showroom prices, customs duties or type approval. The Franco-German statement does not name BYD, SAIC, Geely, Chery or any other company. The immediate effect for a buyer depends on the national programme, the vehicle’s final assembly site, the battery-cell origin and the eligibility rules used by the authority providing support.
France already uses production criteria in some of its electric-car support lists. The French public-service portal explains that the vehicle assembly site and the battery-cell production site must be located in the European Economic Area for the relevant European-production list. That existing French mechanism should not be confused with the new EU-level proposal.
What happens next
The Commission, Parliament and Council will have to turn the political agreement into a legal text. Until then, the existing EU rules and national support programmes remain relevant. Manufacturers may adjust factories, batteries and supply chains, but a European plant will not automatically guarantee access to every future subsidy.
For buyers in Romania and elsewhere, the eventual framework could matter for scrappage schemes, company-car incentives and public fleets. There is no final EU-wide component percentage, no definitive list of excluded models and no confirmed implementation date yet. The verified conclusion is narrower: France and Germany are seeking a compromise between emissions cuts, technology flexibility and European production. They have not created a new ban on Chinese cars, and they have not unilaterally cancelled the EU’s 2035 climate objective.
Image: European Commission. Taken from the official Automotive Package page; use remains subject to the Commission’s portal terms.
