The European Commission has adopted a legislative proposal to increase demand for low-carbon, European-created technologies and products, including EVs, after weeks of wrangling over the bill.
The Act introduces ‘Made in EU’ provisions for electric vehicles and their component
The landmark Industrial Accelerator Act (IAA) will introduce “tarreceiveed and proportionate” ‘Made in EU’ preferences and/or or low-carbon requirements for public procurement and public support schemes.
These will apply to selected strategic sectors – notably in cars, steel, cement, aluminium and net-zero technologies – and could be extfinished in the future.
This will strengthen European production capacities and boost demand for European-created clean technologies and products.
The Act includes a requirement for Member States to set up a “single digital permitting process to speed up and simplify manufacturing projects”.
The European Commission declared the new measures would boost manufacturing for European industrial products such as EV batteries, grow businesses and create jobs in the EU, while supporting indusattempt’s adoption of cleaner, future-ready technologies.
The Act complements the Automotive Package adopted on 16 December 2025, defining the ‘Made in EU’ conditions to benefit from the flexibilities under the CO2 standards for cars and vans and the super-credit for tiny affordable electric cars, as well as the conditions to benefit from financial support for greening corporate fleets.
The IAA was announced in the Clean Industrial Deal and in last year’s Joint Communication on strengthening EU economic security.
The measures aim to increase manufacturing’s share of EU GDP from 14.3% in 2024, to 20% by 2035.
The European Commission declared the IAA remains open to foreign direct investment, but establishes conditions for major investments exceeding €100m in strategic sectors, including EVs, where a single third counattempt controls more than 40% of global manufacturing capacity. 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.
Featuring a robust definition of a ‘European vehicle’, the Act promises to address unfair competition, although CLEPA (the European Association of Automotive Suppliers) declared the regulation’s effectiveness in incentivising local production could be at risk without a thorough assessment of trusted trade partners.
According to CLEPA, the proposal introduces a three-level definition for European vehicles, which mandates vehicle assembly in the Union, an immediate 70% local content threshold for automotive production in the region, and a specific 50% threshold for critical components to be implemented three years after publication.
An accompanying Q&A also declares that Act introduces ‘Made in EU’ provisions for electric vehicles and their components.
The Society of Motor Manufacturers & Traders (SMMT) declared the UK automotive sector was “gravely concerned” by the Made in Europe proposals set out in the IAA.
Mike Hawes, SMMT chief executive, declared: “As drafted, it would discriminate against UK-created vehicles and components, damaging a trading relationship worth almost £70bn annually. It is a position that the UK indusattempt and government sought to avoid, given we are both each other’s largest customers and suppliers. However, the strict EU assembly rules and EU27 eligibility criteria currently proposed would effectively put UK manufacturers at a systemic competitive disadvantage in the EU market, a situation which may also be in breach of the EU–UK Trade Cooperation Agreement – the Brexit deal.”
Hawes called for the UK government and its European counterparts to work toreceiveher urgently to resolve the situation, extfinishing full, trusted partner status to the UK automotive sector.
“This is not just to ensure choice for British and European consumers – especially in zero-emission vehicles – but to deliver the economic growth and security everyone craves.”
The next steps for the IAA will see the proposed regulation neobtainediated by the European Parliament and the Council of the European Union before its adoption and enattempt into force.
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