France, Germany confirm ‘made in Europe’ deal as China eyes to flood EU with EVs

France and Germany have agreed on a joint plan to strengthen Europe’s automotive industry through local manufacturing requirements and more flexible carbon-emission targets as Chinese carmakers step up efforts to capture a larger share of the European market.

The agreement, announced by the two countries on Friday, aims to ensure that the transition to electric vehicles supports European production, investment and jobs. However, the proposal still needs broader European Union backing to take effect.

The deal comes as Chinese automakers, having expanded their presence in Europe’s mass-market segment with competitively priced vehicles and advanced technology, are increasingly targeting the region’s premium car market.

At the Paris Motor Show this week, Chinese brands showcased electric vehicles with advanced driver-assistance systems, rapid charging, and comfort technologies, aiming to challenge established European luxury manufacturers.

‘Made in Europe’ push to support local manufacturing

Under the Franco-German proposal, the EU’s planned “Made in Europe” framework would link public support and procurement benefits to local manufacturing and supply-chain requirements. The plan proposes that the automotive sector’s definition of “Made in Europe” cover all 27 EU member states, while allowing other European partners, including Britain, to qualify under specified conditions. The UK would need to meet requirements on reciprocity and alignment with EU investment and trade-protection measures.

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France has favoured restricting the framework to products manufactured within the EU, while Germany has pushed for a broader definition that includes closely integrated trading partners.

The proposal also seeks to ease the EU’s planned 2035 vehicle-emissions requirements. Under the existing European Commission proposal, carmakers would need to reduce carbon dioxide emissions by 90% from 2021 levels by 2035 and address the remaining gap to 100% through measures such as low-carbon steel and alternative fuels. The Franco-German plan would set the reduction target at 90%, without requiring additional compensatory measures.

Chinese automakers expand into premium segment

The European push to protect its automotive manufacturing base comes as Chinese companies seek growth beyond affordable electric cars.

Reuters reported on Friday that manufacturers including Changan’s Avatr and BYD’s Denza are promoting what they describe as “intelligent luxury”, placing technology, rapid charging and driver-assistance features at the centre of their pitch to European buyers.

The strategy reflects mounting competitive pressure in China, where domestic vehicle sales fell 20% in the first half of 2026, according to Reuters. With competition intensifying at home and Chinese brands largely shut out of the US market, Europe has become an important destination for their expansion.

Chinese manufacturers are now seeking to challenge established premium brands such as BMW, Mercedes-Benz and Audi, which benefit from decades of brand recognition among European consumers.

The competition is not limited to the luxury segment. Chinese carmakers have already gained ground in Europe’s mainstream market by combining relatively affordable models with advanced technology, raising pressure on European manufacturers to improve their offerings while keeping costs competitive.

European industry faces a competitive test

The agreement between France and Germany signals a shared effort to make the shift towards cleaner vehicles compatible with the preservation of Europe’s industrial base.

However, the proposal’s eventual impact will depend on whether other EU member states and the European Parliament support the plan. Its broader challenge will be to strengthen European production without undermining the region’s climate goals or its ability to compete in a market increasingly shaped by Chinese manufacturers.

With inputs from agencies