Europe's Carmakers Brace for "Made in EU" Shake-Up

The European Commission's Industrial Accelerator Act cleared its first major hurdle this week, setting Brussels on a collision course with the continent's own automotive industry in what is shaping up to be one of the most consequential regulatory battles the sector has faced in years.

The act, which establishes "Made in EU" preferences in green public procurement, passed after months of delays and an overnight revision session that produced 44 last-minute amendments. Under the current draft, an electric vehicle must source at least 70 per cent of its parts cost — battery cells excluded — from within the EU to qualify for public subsidies. The legislation now moves to review by the Council of the EU and the European Parliament, where further revision is widely expected.

The response from carmakers has been conspicuous in its hostility. When Industry Commissioner Stéphane Séjourné gathered more than 1,000 signatories in support of the act in January, not a single automaker was among them. Renault, Stellantis and Volkswagen — all of which have publicly endorsed the principle of local sourcing — declined to sign over concerns about the 70 per cent threshold and how European content would be defined in practice.

The stakes are particularly acute for Germany's export-dependent manufacturers. BMW's chief executive Oliver Zipse has warned that rigid local content rules risk leaving European industry behind in the global innovation race, while the VDA industry group has flagged the prospect of Chinese retaliation against measures perceived as protectionist — a concern grounded in recent precedent.

Meanwhile, the broader picture for European car sales remains challenging. New EU car registrations fell 3.9 per cent in January, marking a second consecutive difficult start to the year. ACEA Battery-electric vehicles now hold a 19.3 per cent market share — improved, but well short of the trajectory needed to meet Brussels' own 2030 targets. The industry, it seems, is being asked to accelerate whilst simultaneously navigating an increasingly complex regulatory road.