Franco-German car deal a ‘historic mistake’ that weakens climate ambition and Europe’s car industry

T&E has labelled the French and German government’s agreement to weaken the EU’s car CO₂ standards and IAA requirements as a ‘historic mistake’. The agreement to allow cars assembled in the EU but built with Chinese batteries to be labeled as Made-in-EU jeopardises the entire European battery supply chain, warns T&E.

Anna Krajinska, senior director at T&E, says: “Germany and France are making a historic mistake. German and French political leaders claim they are acting to save jobs, but this may well be the deal that buries Europe’s auto industry. When drivers are facing record fuel prices and Europe’s car industry is under intense pressure from the Chinese, a deal that slows down the shift to EVs is the worst possible move.”

With fuel prices at record highs and electric cars repeatedly breaking sales records, this agreement will drastically slow down the shift to electric. T&E finds that the proposed deal would curb the supply of EVs from 57% based on today's target 57% to 43% in 2030. The recent EV progress report by T&E shows that this will jeopardise the ability of EU carmakers to compete with Chinese rivals and remain competitive in the global EV race. Crucially for consumers it will slash the availability of cheap models coming on to the market.

“Shockingly, electric cars assembled in Europe with batteries produced in China would receive a “Made-in-EU” label. This is a scandal which will cost jobs across the European battery supply chain. The car CO₂ standards and the IAA are the last chance to halt the decline of Europe’s auto manufacturing. With this agreement it is impossible to see how this will be achieved,” says Anna Krajinska.

The deal suggests sourcing just 10% of battery cells in Europe in 2028–2029, rising to 20% in 2030–2031. This weakens protections for European battery manufacturing and sets ambition well below the status quo, as over 50% of cells used in electric vehicles sold in the EU were already produced in Europe in 2025. This low threshold would destroy demand certainty for European gigafactories, putting 164 GWh of capacity at risk in 2027 and 254 GWh in 2030.

“Delaying and weakening IAA requirements for Made in EU batteries and strategic components like cathodes will have catastrophic consequences on the European battery supply chain. Sourcing requirements for EU cells and cathodes are too low and come way too late. Setting such a low bar will destroy Europe’s strategic autonomy plans once and for all.” concludes Anna Krajinska.

T&E calls on members of the European Parliament and EU governments to reject any further weakening of the car CO₂ standards and to agree to effective “Made-in-Europe” measures and ambitious electrification targets for large company car fleets, which will ensure growing demand for European battery production from 2027.