Franco-German auto deal spares Stellantis but leaves Renault exposed

An assembly line at the Stellantis automotive plant in Poissy, west of Paris in the Yvelines department, France, May 4, 2026. BENOIT TESSIER/REUTERS It's a huge sigh of relief for French automakers. France and Germany confirmed on Friday, October 16, that they had reached an agreement to "achieve substantial reductions in CO 2 emissions while strengthening Europe's capacity to develop and manufacture the next generation of electric vehicles."

After months of tough negotiations, French and German industry leaders had been pushing in recent days for a swift resolution, fearing failure. Under the new regulation taking shape, carbon emissions must ultimately be cut by 90% by 2035, instead of the original 100% target – a French concession that satisfied the German auto industry, which produces a large number of hybrid cars. The two French carmakers, Renault and Stellantis, have not reacted to the deal in the same way.

The agreement states that only electric vehicles produced in the 27 European Union member states will be eligible for tax breaks and subsidies. However, an exception will be made for three countries outside the EU, including the United Kingdom. This geographic scope was supported by Stellantis and Germany's Volkswagen, which influenced the compromise reached between Paris and Berlin. You have 76.29% of this article left to read. The rest is for subscribers only.