Germany, France agree on deal to support Europe's struggling car industry

Germany and Francen have reached a deal to protect Europe's automotive industry, the countries said in a statement Friday.

The plan aims to cut CO2 emissions and support the development and construction of electric cars in Europe, the statement added.

"Our shared ambition is clear: to successfully transform our automotive industry while maintaining our climate ambition and ensuring that the cars of the future are produced in Europe," the countries said. 

The pact also includes incentives for investment, research and production.

Europe's automotive industry faces tough competition from China

European car makers have been struggling to compete with their Chinese counterparts in the electric vehicle market,  resulting in cost-cutting measures.

Premier of the state of Lower Saxony Olaf Lies hailed the agreement as a "strong signal" in support of Europe's car industry that protects jobs in the sector.

Lower Saxony is where German automotive giant Volkswagen's headquarters are located, in the city of Wolfsburg.  Lies is also part of VW's supervisory board.

Germany's auto industry faces a deep structural crisis due to intense pressure from Chinese rivals, the transition to electric vehicles (EVs), higher production costs and other challenges.

As Europe's biggest carmaker by volume, VW has the heaviest exposure to overcapacity in its German plants, high fixed costs and its reliance on China.

Edited by: Natalie Muller

Don't let the algorithm hide the news. If you rely on our team for trusted reporting, please take a moment to select us as your Preferred Source on Google by clicking here and hitting the "star" or "preferred" button, so you'll always see our verified news first.

Can Volkswagen stage an automotive comeback?