EU’s “Made in Europe” law clears Commission after long delay

The European Commission is preparing to adopt the Industrial Accelerator Act, establishing “Made in EU” preferences in green public procurement following months of delays and a final round of revisions that ran overnight into 3 March. The regulations will cover the manufacturing of batteries and energy storage, electric vehicles (EVs) and their associated components, solar photovoltaic technology, and the extraction and recycling of critical raw materials. 

A decision on whether to extend the “Made in EU” designation to friendly third-party nations like the United Kingdom has been deferred by six months. Under the current draft, an electric vehicle must source at least 70% of its parts cost—battery excluded—from within the EU to qualify for public subsidies. Battery content requirements are also included, though cells are exempt, acknowledging China’s dominance of global cell supply. 

The act will also mandate that steel purchased through public procurement be at least 25% low-carbon. A planned emissions label for steel was dropped at the last minute following concerns from internal Commission departments about duplication with separate product labelling legislation under development.

Automotive is perhaps the only sector to have put up substantial resistance to the Industrial Accelerator Act’s passing. Back in January, Industry Commissioner Stéphane Séjourné accumulated more than 1,000 signatories to an opinion piece in support of the act, including Thyssenkrupp and Michelin. Notably, there were precisely zero automakers among them. 

Five people with direct knowledge told the Financial Times at the time that automotive companies and associated organisations had declined to sign due to concerns about what would qualify as European content and how the rules would be applied in practice. Séjourné’s office acknowledged the automotive sector had been “the only sector more hesitant to sign” but said this did not represent a rejection in principle.

The refusal of automakers to co-sign—including those like Renault, Stellantis and Volkswagen that have publicly voiced their support of local sourcing rules—indicates that the 70% threshold and the definition of what exactly constitutes “European” content have been somewhat more contested than the Commission has let on. 

Indeed, much of the unease hinges on the definition of “Made in EU” itself. Ford’s European operations depend heavily on supply chains running through the UK and Turkey, and the automaker’s European President Jim Baumbick has argued that excluding those countries “would weaken production inside the EU itself”. 

Turkey in particular is a major low-cost manufacturing hub for Toyota, Stellantis, Hyundai and Renault, but will soon also become one of two major manufacturing hubs for BYD. Extending the definition to include Turkey, it is feared, would risk creating a back-door for Chinese automakers to qualify for EU subsidies by establishing themselves inside the regulatory umbrella while. This concern was flagged directly by E-Mobility lobby group secretary general Chris Heron, who described the situation to Reuters as “like walking on eggshells”.

Germany led a rearguard action by ten member states, styling themselves the Friends of Industry, in favour of lighter regulation and more open trade. Economy Minister Katherina Reiche said the act would create “a regulatory wasteland that nobody could understand any more”. German industry titans have also offered their scepticism: BMW Chief Executive Oliver Zipse has warned that complex local content rules would leave Europe behind in the global innovation race. 

Of course, German automakers have particular cause for concern: they sell more than a quarter of their vehicles in China, and the VDA industry group has flagged the risk of retaliation against measures “perceived as protectionist” given historic precedent. China has previously retaliated against EU and Canadian tariffs on Chinese-made EVs, most notably by hammering additional duties on agricultural exports. 

The act will now proceed to a review stage overseen by the Council of the EU and European Parliament, where further revisions are all but inevitable. The process has already produced 44 last-minute changes in a single overnight meeting, and entire sectors—including technology—were dropped from the legislation’s scope before adoption. Valeo Chief Executive Christophe Perillat laid out the stakes for the supplier community plainly: “If we don’t do this, there will be massive relocations. I’ve never seen an industry go and come back.”