France and Germany want to pause the plug-in hybrid CO2 correction until 2030

What was agreed

France and Germany reached a joint position on the EU's car CO2 rules and its "Made in Europe" industrial law on 16 October, on the sidelines of the European Council in Brussels. Chancellor Friedrich Merz said the understanding still had to be turned into legislation and that he expected the European Parliament to go along with it.^1,2,3

On plug-in hybrids, Reuters reported that the joint paper calls for no revision of the utility factor before 2030. InsideEVs Germany, citing a draft first reported by Automobilwoche, said the factor would stay at today's level until 1 January 2030 for cars with at least 80 km of electric range, then be adjusted every year using real-world data. Agence Europe described the tightening as suspended until 2029. The paper itself has not been published.^2,3,4

The wider deal keeps the Commission's proposed 90% cut in new-car CO2 by 2035 but drops the requirement to offset the remaining 10%. It would also recognise cars running only on renewable or low-carbon fuels, assess targets over multi-year periods and add super credits for electric cars built in Europe.^2,3,4

What the utility factor does

A plug-in hybrid's official CO2 figure blends a battery-powered result with an engine result, weighted by the utility factor. EU law set out a two-step revision because real-world emissions were far above official ones, with the second step based on data from on-board fuel meters.^5,6

The first step applied to new type approvals in 2025 and to existing models in 2026. For a car with 100 km of tested electric range, it cut the assumed electric share from 90% to about two-thirds. The second step, due on 29 November 2026 for new types and a year later for all new cars, would cut it to 44%.⁶

Transport & Environment, which campaigns for cleaner transport, says data for cars registered in 2024 show only 27% of distance driven purely on electricity. It estimates that freezing the factor at the current level would understate real-world plug-in hybrid emissions by 56%.^6,7

A worked example: the Tiguan eHybrid

T&E's figures for the Volkswagen Tiguan plug-in hybrid show what is at stake. Volkswagen more than doubled its electric range from 55 km to 119 km, which held its official figure at 36 gCO2/km under the 2025 rules. With no further changes, the next correction would raise it to 83 g/km.^6,7

That crosses a line that matters for tax. Twelve EU countries use a 50 gCO2/km threshold or stricter in at least one tax, and Germany's company car discount for plug-in hybrids requires under 50 g/km or more than 80 km of electric range. If the reported 80 km pause applies, a car like the Tiguan would keep its lower figure until 2030.^3,6

The effect on tax bills varies. T&E calculates that the correction alone would add about €6,550 to a Tiguan's four-year tax bill in Sweden, but would change nothing in Germany, Italy or Spain. Fuel costs are a separate matter: they follow how often the owner charges, whatever the official number says.⁶

What happens next

The Commission's December 2025 proposal already allowed plug-in hybrids and range extenders to keep a role after 2035, provided the remaining 10% of emissions was offset with EU-made low-carbon steel or e-fuels and biofuels. Its press release did not mention the utility factor.⁸

Council approval needs a qualified majority of at least 15 countries representing 65% of the EU population, and Parliament needs a simple majority, with a plenary vote planned for November. Reuters reports that a final common text is unlikely before early next year. Until a change is adopted, the 29 November 2026 step remains the law.^2,6,9

T&E called the deal a "historic mistake" and estimates it would cut the share of electric cars carmakers must supply in 2030 from 57% to 43%. Buyers comparing plug-in hybrids over the coming year should check which utility factor a quoted CO2 figure uses, and whether their tax rules follow CO2 or electric range.¹⁰