Combustion engine phase-out continues to wobble Merz writes letter to Brussels and drops a bombshell

dpa

28.11.2025 - 13:33

The coalition agrees on a position on the planned phase-out of new combustion cars in the EU from 2035. The industry is to be given more leeway. A new e-car purchase premium is to provide a boost.

DPA

28.11.2025, 13:33

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The German coalition wants to soften the planned EU ban on new combustion engines from 2035 and create more technical leeway for the car industry.
In addition to e-cars, plug-in hybrids and vehicles with range extenders are to remain permitted after 2035, provided their carbon footprint is offset elsewhere.
At the same time, Berlin is planning a new income-related purchase premium for electric cars to make it easier for households with low and medium incomes to make the switch.

The German government wants to secure jobs in the car industry - environmental associations speak of a "role backwards" in climate protection: the black-red coalition wants to lobby at EU level for a relaxation of the planned ban on new combustion cars from 2035. The aim is more flexibility and technological openness, said Federal Chancellor Friedrich Merz (CDU) after consultations of the coalition committee in Berlin. Climate targets should be achieved. "But we want to achieve them in a way that is open to technology," said Merz. "We want to achieve them with mobility that also preserves jobs in Europe and especially in the German automotive industry."

Merz said that he would ask the EU Commission to continue to allow vehicles with a dual drive system, i.e. vehicles consisting of a battery drive and combustion engine, in addition to purely battery-electric vehicles after 2035. Merz announced that he would write a letter to EU Commission President Ursula von der Leyen to this effect.

EU wants to make proposals

The EU had decided that new cars would no longer be allowed to emit climate-damaging carbon dioxide (CO2) during operation from 2035. This would effectively mean that new cars with combustion engines would no longer be allowed to be registered. The aim is to reduce emissions in the transport sector. Following pressure from the industry and member states, the EU Commission had announced its intention to review the regulation on phasing out combustion engines. The Commission is expected to present a proposal for this on December 10.

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After that, however, the European Parliament and the EU member states can still make changes to the proposal. In the end, a sufficient majority in both institutions must agree.

Coalition emphasizes openness to technology

Specifically, the coalition wants technologies such as plug-in hybrids and electric vehicles with range extenders to be allowed to be registered even after 2035. Environment Minister Carsten Schneider (SPD) said: "In return, the additional emissions are to be offset, for example through the use of green steel in car production or renewable fuels. Overall, the climate impact of the current regulation will thus be maintained." Germany is taking a pragmatic position in the European debate. "The climate impact remains, but the industry is given more flexibility on the way to the goal of zero emissions for new cars by 2035."

Merz spoke of sending the right signal to the EU Commission that a good solution can be found that protects against fines on the one hand, but also enables competitiveness in the automotive sector on the other - without calling climate protection targets into question. Penalties are threatened if manufacturers fail to meet so-called CO2 fleet limits.

Not a "hard cut" - Söder: no more rigid phase-out of combustion engines

After a "car summit" in October, Merz said that there should be no "hard cut" in 2035. The background to this is the ailing car industry. In addition, although new registrations of electric cars are increasing, CO2 emission targets are at risk of being missed. Many jobs in Germany depend on combustion engines.

CSU leader Markus Söder was very pleased with the coalition agreement. This is "the end of the very rigid end of the combustion engine", said Söder. The persistence had paid off. It had to be acknowledged that the SPD had moved forward here.

SPD leader and Vice Chancellor Lars Klingbeil said that the future viability of the German automotive industry and securing jobs was the central argument for the coalition. The future of the automotive industry is electric. However, more technology options and flexibility are needed.

State paper as a blueprint, IG Metall praises resolution

In October, following a conference of state premiers in Mainz, Söder had said that this should also be the blueprint for an agreement in the coalition in Berlin and for the position of the federal government in Europe. In the resolution paper of the federal states from October, the federal government is asked to secure the "future of the combustion engine" through regulatory measures. There should be no rigid ban on combustion technology from 2035.

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Christiane Benner, First Chairwoman of the IG Metall trade union, said: "The politicians have reached an agreement and the employees are breathing a sigh of relief. We have been pushing for this for a long time. A clear path to electromobility with simultaneous flexibilization, that must now provide security - especially for employees in the industry." Hildegard Müller, President of the German Association of the Automotive Industry, spoke of good news for the automotive industry and its hundreds of thousands of employees.

Criticism from environmental associations

Martin Kaiser, Managing Director of Greenpeace Germany, spoke of a fatal mistake in terms of economic and climate policy. No combustion engine or plug-in hybrid even comes close to the efficiency of an electric car. The Federal Managing Director of Deutsche Umwelthilfe, Jürgen Resch, said that the agreement in the coalition committee meant that the climate targets in the transport sector were moving even further away. BUND transport expert Jens Hilgenberg said that far-reaching concessions had already been made to the car industry and suppliers in the previous formulation of EU regulation.

The ecological transport club VCD spoke of a "role backwards". Federal chairwoman Christiane Rohleder said: "Even after 2035, so-called "highly efficient combustion engines" should be permitted if they are powered by e-fuels or biofuel. However, e-fuels will remain rare and expensive in the future, and they will be needed where other solutions are difficult - such as for aircraft."

Promotion of electric cars

The coalition also agreed on the specific design of a previously announced state subsidy program for households with low and medium incomes - this involves the purchase and leasing of purely electric and plug-in hybrid vehicles. The aim is to support the switch to climate-neutral mobility.

According to a resolution paper, an annual taxable income of 80,000 euros at household level will serve as the basis for determining eligibility. According to Schneider, the income limit increases by 5,000 euros per child. The basic subsidy is 3,000 euros plus supplements for a maximum of two children. For a monthly net income of less than 3,000 euros, the subsidy will be increased by 1,000 euros. According to Schneider, the first stage of the subsidy program is aimed at new cars. The Ministry of the Environment, which is in charge of the program, will also propose regulations for used cars for a second stage.

Söder spoke of a hugeboost for the domestic market. A "local content" requirement is planned. This should ensure that it is not just about cars produced in Asia, but that they create added value in Germany.

Funding in the coming year

According to the paper, the design of the funding program is to be finalized by the end of the year. The program is to be launched as soon as possible in 2026 - subject to approval by the EU Commission under state aid law. An additional three billion euros are to be made available for the funding program. The funds are to come from the Climate and Transformation Fund, a special federal fund. Following the abrupt end of a previous state purchase premium for e-cars at the end of 2023, sales on the German market plummeted. There was no income limit for the previous premium.