Germany and France have agreed on a plan to support Europe’s struggling automotive industry by easing some of the EU’s climate requirements for carmakers.
The EU’s 2035 target of reducing CO₂ emissions from new cars by 90% compared with 2021 levels remains unchanged. However, the European Commission’s December proposal dropped the requirement for manufacturers to offset the remaining 10% through e-fuels, biofuels or low-carbon steel. The revised approach also offers greater flexibility for plug-in hybrids and introduces “Made in Europe” criteria for public subsidies and procurement.
German Chancellor Friedrich Merz welcomed the move, calling it a positive development for motorists and employment. Germany’s automotive sector currently employs 691,500 people, its lowest level in 20 years. Volkswagen plans to cut 50,000 jobs, while Porsche, Bosch and ZF have also announced major workforce reductions. Industry association VDA warns that up to 225,000 jobs could disappear by 2035.
Automakers argue that the industry needs more flexibility amid mounting economic pressure. However, critics point out that Germany’s job losses are partly driven by growing competition from China, particularly in the electric vehicle market.
According to Transport & Environment (T&E), the proposed changes could reduce EVs’ share of EU car sales in 2030 from 57% to 43%. Environmental groups have condemned the move as a “historic mistake”, arguing that weakening climate requirements risks undermining Europe’s competitiveness in the global EV race.
The proposal must still be approved by the Council of the EU and the European Parliament.
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