Berlin wants to allow ‘highly efficient’ ICEs after EU’s 2035 combustion engine phase-out

Germany’s coalition government has agreed on a joint position regarding the EU regulation that will permit only new cars with zero tailpipe CO₂ emissions from 2035. Following the coalition committee meeting, party sources confirmed that Germany will advocate for additional technological options to be considered in the EU’s upcoming review. The position communicated to the DPA newsagency states that ‘highly efficient combustion engine models’ should remain eligible for registration beyond 2035.

German Chancellor Friedrich Merz intends to outline the government’s stance in a letter to EU Commission President Ursula von der Leyen. According to the parties, the aim is to ensure that the upcoming revision of the EU regulation takes account of a broader technological spectrum. The government’s internal agreement follows several weeks of negotiation, during which differing views on the role of combustion technology had delayed a unified position.

The European Commission announced earlier this year that it would reassess the 2035 regulation following requests from several member states and industry representatives. A revised proposal is expected on 10 December. The existing legislation requires all new cars registered from 2035 to be zero-emission, effectively limiting registrations to battery-electric and hydrogen fuel-cell vehicles.

German states call for flexibility

Germany’s coalition argues that the transition should include a wider range of options. A paper adopted by Germany’s federal states in October urged the federal government to secure the ‘future of the combustion engine’ through regulatory measures and warned against a ‘strict ban on combustion engine technology from 2035 onwards’. The document also highlighted the potential role of ‘alternative climate-friendly drive concepts, climate-friendly fuels and complementary transitional technologies such as highly efficient combustion engines, plug-in hybrids and electric vehicles with a range extender’.

The European Commission’s December proposal will determine how much influence Germany’s position will have in the upcoming legislative process. Further negotiations among EU member states are expected as the regulation progresses through review and potential amendment.

Meanwhile, the German federal government also agreed on the framework for a new EV subsidy scheme aimed at lower- and middle-income households. It was first announced in October. According to a resolution paper following the coalition committee meeting, the programme targets households with low and medium incomes. The document states: “A taxable annual income of €80,000 per household shall serve as the basis for determining eligibility.” The eligibility threshold will rise by 5,000 euros per child.

The planned subsidy consists of a 3,000-euro base amount. The paper adds that it ‘increases by €500 per child to a maximum of €1,000’. Households with particularly low net incomes will receive an additional top-up. The government intends to finalise the full design of the programme by the end of the year, with the launch scheduled to take place ‘as soon as possible in 2026’, subject to approval under EU state-aid rules.

handelsblatt.com (subsidies; in German), tabla.medios (coalition agreement; PDF; in German), youtube.com (press conference; livestream; in German)