What each side wanted, and who won

The franco-german deal ends a long negotiation between two capitals with very different priorities. Berlin wanted less stringent carbon emission targets for carmakers and a broad interpretation of 'made in Europe' that would include non-EU trade partners. Paris had pushed to preserve the EU's climate ambitions and to keep the 'made in Europe' public procurement scheme limited to EU nations.

According to the draft document, Berlin won the argument on emissions targets while Paris carried the day on the definition. Diplomats said the deal is provisional pending a final sign-off from Berlin.

Loosened emissions targets

The European Commission had proposed scrapping the 2035 ban on new petrol and diesel vehicle sales, replacing it with a requirement for manufacturers to cut exhaust emissions by 90 percent. The remaining 10 percent would have had to be compensated through credits, for example by using low-carbon steel.

The Thursday agreement watered that proposal down on several fronts:

• •Manufacturers no longer have to compensate residual emissions.
• •Cars running on renewable fuels can count as 'zero-emission'.
• •'Super credits' previously intended for small affordable electric cars are extended to all vehicles "irrespective of their size or length".

A narrower 'made in Europe' scheme

Access to public money sat at the heart of the Commission's plan: companies would have needed minimum thresholds of EU-made parts in their products. Dozens of partner countries holding EU deals giving European firms the same access to public money as local firms could also have fallen under the scheme. The pact as drafted covers cars in the EU's 27 countries only, though a few other states - Britain and Norway, under certain conditions - can opt in. That reach is smaller than the Commission set out in March.

Britain's inclusion matters to industry: European carmakers had specifically asked for it, citing deeply integrated supply chains.

London's reaction

The office of British Prime Minister Andy Burnham welcomed the inclusion of the UK in the scheme, saying it "would be good news for the British automotive industry and the jobs and investment it supports across the UK".

The agreement remains provisional until Berlin gives its final sign-off, diplomats said.