# Paris and Berlin Reach for a Made in Europe Pact to Rescue Their Carmakers > France and Germany are trying to fuse two agendas into one grand bargain, French protection for European industry and German relief for a car sector in crisis. The prize is a Made in Europe framework that would tilt public money toward the continent's own factories. - Source: Berlin Today - Canonical URL: https://berlintoday.eu/article/paris-and-berlin-reach-for-a-made-in-europe-pact-to-rescue-their-carmakers - Author: Doug Brown - Section: Business - Published: 2026-07-27T15:30:08.281Z - Updated: 2026-07-27T15:30:08.281Z - Tags: European Union, auto industry, Made in Europe, Emmanuel Macron, Friedrich Merz, Volkswagen, industrial policy, electric vehicles --- France and Germany are working toward a sweeping deal on cars and industrial policy, an attempt to weld two national obsessions into a single European bargain. On one side sits Paris, long determined to reserve public contracts and subsidies for European industry. On the other stands Berlin, scrambling to throw a lifeline to a car sector that has slid into its deepest crisis in decades. The wager is that each capital can get more of what it wants by backing the other. The push gathered pace after a round of joint ministerial meetings in Germany, where Emmanuel Macron and Friedrich Merz instructed their governments to hammer out the details. The talks are still live rather than sealed, but the shape of the trade is already visible, and it says a great deal about how the continent now thinks about protecting its own. ## What each side brings to the table The German motive is not hard to read. The country's carmakers are reeling, and the scale of the retrenchment has jolted the political class. Volkswagen alone has signalled plans to cut around 100,000 jobs across its global operations, a number large enough to turn an industrial slump into a political emergency. For Merz, propping up the sector has become a test of whether Berlin can still defend its manufacturing heartland. France comes at the problem from a different angle but arrives at a similar instinct. For years Paris has argued that European taxpayers should not be funding the rise of foreign competitors, and it wants the rules written so that European factories get first call on public money. Fused together, the two positions become a joint case for spending European cash on European production, whether the goal is saving German jobs or shielding French industry. ## The Made in Europe lever The centrepiece of the emerging pact is the European Union's Industrial Accelerator Act, and specifically a set of Made in Europe provisions that France has been championing. Under Berlin's support, those rules would tighten the definition of which trading partners count as trusted, and therefore which suppliers can benefit from key public procurement and subsidy programmes. The practical effect would be to steer contracts and support toward companies rooted on the continent. That is a meaningful shift for a bloc that has often prized open markets over local preference. By making trusted partner status harder to obtain, the framework would give European producers an edge in the very programmes designed to rebuild the region's industrial base, and it would quietly raise the bar for rivals hoping to sell into those schemes from outside. ## The fight over 2035 Hovering over the negotiation is the argument that has divided the two capitals for months, the future of the combustion engine. Berlin has pressed Brussels to loosen the planned 2035 cutoff for new petrol and diesel cars, seeking room for plug-in hybrids, range extenders and highly efficient engines to survive past the deadline. Merz has cast that flexibility as essential to keeping German plants alive while the market for electric vehicles matures. Paris has been far more protective of the all-electric path, wary of stranding the heavy investments its own carmakers have already sunk into batteries and electric platforms. France has pushed instead for support for European battery production and for rules that would nudge corporate fleets toward electric cars built in Europe, a way to grow demand without handing the advantage to lower-cost Chinese brands. Reconciling those two visions is one of the hardest knots the deal has to untie. ## Pressure from outside Both governments are moving under the same external squeeze. Chinese manufacturers have surged into the European market with cheaper electric models, and the threat of American tariffs has added another layer of uncertainty for exporters. Against that backdrop, the appeal of a protective, continent-first framework has grown, and ideas that once looked like heresy to free trade orthodoxy now command serious attention in Paris and Berlin alike. Whether the grand bargain holds together will depend on the fine print, and on whether France can accept German flexibility on engines while Germany swallows French insistence on local preference. What is already clear is the direction of travel. The two largest economies in the bloc are converging on a belief that Europe should spend its industrial money at home, and that the car, the emblem of the continent's manufacturing might, is where that belief will be tested first. --- Originally published by Berlin Today. Free to cite with attribution and a link to https://berlintoday.eu/article/paris-and-berlin-reach-for-a-made-in-europe-pact-to-rescue-their-carmakers.