EU Industry Commissioner Stéphane Séjourné has unveiled the long-awaited ‘Industrial Accelerator Act’. With this industrial strategy, the EU Commission aims to boost domestic production, create jobs, and reduce the EU’s dependence on the USA and China. This will impact numerous sectors, including the automotive industry.

Officially, the Industrial Accelerator Act (IAA) is presented as a “legislative proposal designed to strengthen Europe’s industrial base by boosting manufacturing, growing businesses, and creating jobs in the EU.”

If adopted, the European Commission expects the package to stimulate production, foster corporate growth, and create jobs within the EU, while simultaneously supporting the adoption of clean, future-proof technologies in industry.

Added value

As anticipated for weeks, the Commission aims to introduce “targeted conditions to ensure major foreign direct investments generate added value for the EU”. In other words, when a government spends money to procure or subsidise goods, certain CO₂ and ‘Made in EU’ criteria must be met.

“These will apply to selected strategic sectors, notably in steel, cement, aluminium, cars, and net-zero technologies, while establishing a framework that can be extended, where appropriate, to other energy-intensive sectors such as chemicals,” the Commission explains.

“This will strengthen European production capacities and boost demand for European-made clean technologies and products.” Under the law, EU member states will also be required to “single digital permitting process to speed up and simplify manufacturing projects.” However, the Commission does not provide further details on this.

Manufacturing’s share

The Commission is more specific about other objectives and the background of the new initiative. “The Act sets a goal to increase manufacturing’s share of EU GDP to 20% by 2035,” it states, compared to just 14.3 % in 2024.

The Commission thus views the package as crucial to “Europe’s economic resilience, innovation lifecycle, and social fabric.” Equally important, however, is the global perspective: the EU explicitly aims to “strengthen its industrial base against the backdrop of growing unfair global competition and increasing dependencies on non-EU suppliers in strategic sectors.”

The EU does not intend to completely isolate its industry. Instead, it claims to remain “one of the world’s most open markets” and is determined to “preserve this openness as a key source of economic strength and resilience.”

To this end, the regulation emphasises “greater reciprocity in public procurement”, granting equal treatment to countries that provide EU companies access to their markets. If this is not the case, access to EU markets will be restricted for those countries.

Made in EU or Made with EU?

This is a critical point, as there had been much debate in advance about the distinction between ‘Made in EU’ and ‘Made with EU.’ The latter would have included partners more broadly but would have significantly diluted the original goal of promoting manufacturing within the EU.

For example, an electric car built in India could have met EU criteria thanks to a free trade agreement, but would not have employed a single European worker.

To remain open to direct foreign investment, the EU plans to introduce certain barriers. For large investments exceeding €100 million in strategic sectors (including the automotive industry), specific criteria will apply if a “single third country controls more than 40% of global manufacturing capacity”, a scenario likely to affect, for example, battery factories operated by Chinese companies in the EU.

“Such investments must create high-quality jobs, drive innovation and growth, and generate real value in the EU through technology and knowledge transfer, as well as compliance with local content requirements. They must also guarantee a 50% minimum level of European employment, ensuring businesses and citizens benefit alongside investors from access to the Single Market,” the EU states.

Waiting for further details

The Commission’s communication does not provide detailed insights into the impact on the European automotive sector. A Q&A published alongside the IAA package merely states: “It also introduces ‘Made in EU’ provisions for electric vehicles (EVs) and their components.” No further details are provided.

At the end of February, reports based on a draft of the law outlined these provisions in slightly more detail. Criteria were described, covering not only assembly but also the battery, the most valuable component of an electric vehicle.

In the first phase, it is expected to be sufficient to assemble the battery system from non-EU cells in the EU and equip it with a locally produced battery management system. During this transition period, battery cells from Asia could still be used if the ready-to-install battery systems are assembled in the EU.

From the third year onwards, battery cells and specifically cathode active materials would also need to originate from the EU. However, the status of this draft remains unclear.

The automotive industry is divided

The automotive industry is divided on this issue: VW CEO Oliver Blume and Stellantis CEO Antonio Filosa called for a CO₂ bonus for European battery-electric vehicles in a joint open letter. However, German premium manufacturers are not supporters of this strategy: despite declining market shares, China remains a key market for them, and they fear a trade conflict.

“Today marks a major step in the renewal of the European economic doctrine so the Union is fit for the 21st century, as recommended by the Draghi report,” says Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy.

“Facing unprecedented global uncertainty and unfair competition, European industry can count on the provisions of this Act to boost demand and guarantee resilient supply chains in strategic sectors. It will create jobs by directing taxpayers’ money to European production, decreasing our dependencies, and enhancing our economic security and sovereignty,” he adds.

First reactions

Also, the EU member states and the Parliament aren’t on the same line here. France is an outspoken advocate of the ‘Made in Europe’ principle, but countries like Germany and the Scandinavians are much less enthusiastic.

In the Parliament, reactions are also mitigated. Belgian EVP MP Wouter Beke sees the IAA as “a very important part of the broader puzzle to strengthen the competitiveness of the European industry.” Hilde Vautmans (Renew) stresses that “less rules, less charges and more speed” are the way to go.

Sara Matthieu (Green Party) fears that Europe will remain “hopelessly naïve” compared to other trade blocs, such as the U.S. “By giving countries with a trade agreement automatic access to European tenders and subsidies, Europe not only loses its money but also its negotiation (trump) cards.”

“It’s far more difficult, politically, to remove countries from a list than to add them under conditions, like originally planned. I will surely see to that when we are discussing the matter in the Parliament,” she adds.