EU Proposes New Rule: EVs Must Have 70% Local Parts to Qualify for Subsidies, Pressuring Chinese Automakers

The European Commission plans to introduce new rules requiring electric vehicles (EVs), plug-in hybrids, and hydrogen fuel cell vehicles that receive government subsidies to not only be assembled in the EU but also ensure that at least 70% of their components (excluding batteries) and core battery parts are produced within the EU. The regulation will be incorporated into the Industrial Acceleration Act, aiming to bolster domestic manufacturing and counter the impact of low-priced Chinese EVs. Chinese brands currently hold a 12.8% market share in Europe, and some automakers may be circumventing tariffs by assembling vehicles from imported kits—a practice raising concerns among EU industry players. In response, the EU has established a €1.8 billion "Battery Boost Fund" to support the construction of local battery plants. The European Association of Automotive Suppliers (CLEPA) has called for clear definitions of "Made in Europe" standards and urged maintaining the current level of 75%–80% locally sourced components.