This article is part of the Cypriot presidency of the EU special report.

BRUSSELS — Cyprus, a country without a car sector to speak of, has six months to negotiate a deal aimed at saving one of the European Union’s biggest industries while not gutting the bloc’s climate goals.

The key is going to be managing the clash between France and Germany over cars and climate.

The European Commission will present its automotive package on Dec. 16. It is slated to include a reform of the 2035 legislation that acts as a de facto combustion engine ban and a new initiative on switching corporate fleets — vehicles owned or leased by companies for business purposes — to greener vehicles.

The Commission’s opening bid will kick off battles among member countries — and Cyprus, which takes over the six-month rotating presidency of the Council of the EU on Jan. 1, will have a key role in shaping the final position of national governments.

With the EU’s most powerful capitals closely monitoring the files, and automotive lobbyists lurking in the hallways, that will be no easy feat.

Cyprus is promising to be an honest broker. “The Cyprus presidency aims to reach a text where as many member states as possible can get behind,” a presidency spokesperson said.

The potential for conflict is enormous because the stakes are so high.

Responsible for 9 percent of the bloc’s gross domestic product, the automotive sector and its downstream suppliers are a critical economic pillar for the EU. It’s also facing multiple headwinds: a trade war courtesy of the U.S., stagnating sales in Europe and stiff competition from Chinese rivals.

A wave of layoffs and intense lobbying has pressured the Commission to give leniency on this year’s emission targets and to reexamine the law mandating that only new zero-emission cars can be sold from 2035.

Yet watering down the 2035 law clashes with the EU’s climate goals. The bloc aims to slash greenhouse gas emissions from transport by 90 percent by 2050 — a key part of its target of becoming climate neutral by mid-century.

Battle lines

Talks three years ago on the original 2035 legislation saw France and Germany pitted against one another, with other capitals taking sides depending on their own industrial priorities.

Berlin and Central European nations have maintained their anti-ban stance, with a coalition of countries — Bulgaria, the Czech Republic, Italy, Poland and Slovakia — calling on the Commission to include plug-in hybrids, alternative fuels and other carveouts in its reform of the 2035 legislation.

Paris and its green-oriented allies, meanwhile, wanted more stringent action on climate change.

When the combustion engine ban was passed in 2023, Cyprus voted in favor. Berlin was never much of a fan of the legislation, but did end up reluctantly signing on.

But the politics around the issue have changed dramatically over the last three years. Climate legislation is out of vogue, becoming a favored target of right-wing and populist parties — pressing mainstream politicians to amend or scrap measures.

German Chancellor Friedrich Merz campaigned on overturning the 2035 ban entirely but his coalition between the center-right Christian Democrats and center-left Social Democratic Party prevented him from adopting that stance in Brussels.

Instead, the coalition agreed in November to a proposal that would allow hybrids and what Merz called a “highly efficient combustion engine.” Berlin later clarified that such an engine is, well, one that “is highly efficient.”

“Our common goal should be to achieve innovation-friendly regulations that are open to all technologies and strike a balance between climate protection and industrial competitiveness,” Merz said in a letter to the Commission.

France is also shifting its pro-climate stance under pressure from its own anti-2035 forces.

In October, France and Spain put forward a proposal that would give automakers flexibilities on the 2035 target so long as they meet local content requirements. Both the 2035 reform and the corporate fleets measure are set to include some degree of “Made in Europe” quotas.

Italy has continued its drumbeat for biofuels, which can power combustion engines but critics say is too costly to produce at scale and that it’s not as green as proponents claim.

That sets up Cyprus and its diplomats, for whom the car industry isn’t a key issue, for the mother of political battles.