France and Germany have settled their joint position on Europe's car rules. After a bilateral meeting on the sidelines of the EU summit in Brussels on 16 October 2026, Chancellor Friedrich Merz and President Emmanuel Macron issued a joint statement backing a 90% cut in new cars' fleet CO2 emissions by 2035, with no obligation to offset the remaining 10%, and "Made in Europe" conditions on public money for cars. "A good day for motorists and for jobs in Germany, France and Europe," Merz wrote on X.
That closes ten days of conflicting reports. On 7 October German newspapers said Berlin and Paris wanted the target at 80%; the Élysée then said there was no agreement, and on 15 October Reuters described a near-final 90% deal that still had to be confirmed. It is now the two governments' stated position.
What the two governments agreed
| Point | Franco-German position |
|---|---|
| 2035 fleet CO2 cut | 90% against 2021, no offset for the remaining 10% |
| Car components | 70% made in Europe, batteries excluded |
| Battery content | 10% from European sources |
| Partner countries | UK, Norway, Iceland and Switzerland, if each signs a reciprocity agreement with the EU |
The Commission's December 2025 proposal also set 90%, but required carmakers to make up the last 10% with low-carbon steel made in the EU or with e-fuels and biofuels. The local-content figures come from Euronews' account of the statement. Purchase incentives and public contracts would be tied to that European value creation, and the partner countries would need agreements guaranteeing fair access for European companies and preventing the rules from being bypassed. According to Euronews, the position also allows certain technologies and fuels under set conditions, without a full return to combustion engines.
Who welcomed it and who did not
Volkswagen said the "Made in Europe" proposals have its "full support", and Stellantis called the agreement an important step towards finalising the European automotive package, Reuters reported. Anna Krajinska of the campaign group Transport & Environment said "Germany and France are making a historic mistake" and warned that the deal "drastically slows down EV sales". German Green MP Swantje Michaelsen said that weakening the 2035 targets "creates new uncertainty".
What it means for Tesla
The local-content rule is the part that reaches Tesla's European sales. Tesla builds one car in the EU, the Model Y at Grünheide near Berlin; every Model 3 sold in Europe comes from Shanghai. If incentives and public contracts are tied to European production, a Shanghai-built Model 3 falls on the wrong side of the line, while the Model Y's standing depends on how its components are counted, which Tesla has not published. The Model Y already made up about two-thirds of Tesla's Model 3 and Model Y registrations in Germany in September, as TeslAnt's analysis of Volkswagen's own proposals showed.
The softer 2035 end point cuts the other way. A 90% target with no offset leaves room for some plug-in hybrids and combustion cars in 2035, and Tesla sells only electric cars.
What happens next
The position still has to win over other member states and the European Parliament, whose plenary is due to vote on the Commission's proposal in Strasbourg on 23 November, according to Euronews. Merz may also meet resistance at home: Germany's Social Democratic environment minister has argued for a 95% cut, with the last 5% offset through low-carbon steel. Volkswagen expects the reformed CO2 rules and the "Made in Europe" criteria could be adopted "in the coming weeks".