Germany and France Agree to Soften EU Combustion Engine Ban Beyond 2035

Germany and France have jointly agreed to ease the European Union's ban on combustion engine vehicles beyond 2035 in a move designed to balance environmental ambitions with industrial and economic realities. This agreement, announced on October 16, 2026, allows the continued registration of new gasoline and diesel vehicles in the EU after 2035, provided manufacturers reduce average emissions by 90% without the need to compensate for the remaining 10%. This diverges from the EU Commission's original stance, which demanded full compensation through CO2-neutral fuels.

The revised regulations also impose stricter limitations on state subsidies, restricting them to vehicles manufactured within EU member states, the UK, and other European Economic Area countries. Chancellor Friedrich Merz welcomed the deal as a positive investment signal for Europe's automotive industry and employment sector. Meanwhile, Environment Minister Carsten Schneider underlined the long-term primacy of electric vehicles, highlighting their technical superiority and cost benefits.

France and Germany presented this compromise as part of a comprehensive package to foster clean mobility while securing Europe's competitive edge in the global automotive sector. They stressed the importance of investments and innovations centered in French, German, and broader European production to ensure a decarbonized and innovative automotive industry that safeguards future jobs.

Nevertheless, the agreement has met criticism from organizations such as the transport association T&E Germany, which argued the compromise favors the automotive industry's demands over accelerating Europe's adoption of cleaner technologies.

This new consensus between two of the EU's largest automotive markets could pave the way for wider support in the EU Council to implement the softer ban, reflecting the complex balance between environmental goals and industrial sustainability in Europe’s automotive future.