EU Proposes New Rule: EVs Must Have 70% Local Content to Qualify for Subsidies, Automakers Split

The European Commission plans to unveil its "Industrial Acceleration Act" on February 25, which would require electric vehicles (EVs), plug-in hybrids, and hydrogen-powered vehicles receiving government subsidies or procured by public institutions to be assembled in the EU. Additionally, at least 70% of their components—by value, excluding batteries—must originate from within the EU, and core battery components must also be produced locally. The move aims to strengthen domestic supply chains, counter competition from China, and is accompanied by an €18 billion "Battery Boost Fund." However, automakers remain divided: BMW and Mercedes-Benz warn that the rules could provoke retaliatory measures from China and stifle innovation; Renault supports the initiative but suggests lowering the threshold to 60%; and parts suppliers are calling for all components to be fully included under the localization requirements. Currently, most EU-based automakers still rely heavily on Chinese and South Korean companies for batteries, despite having already established battery plants in Europe. The industry has warned that without action, Europe could lose up to 350,000 automotive jobs.