EU Plans to Include UK, Japanese, and Korean Cars in "Europe First" Procurement to Counter Chinese EV Rivals

The European Union plans to include automobiles manufactured in the United Kingdom, Japan, and South Korea under its “Europe First” procurement rules to counter competitive pressures from Chinese automakers. Originally named “Made in the EU,” this policy forms part of the Industrial Acceleration Act and stipulates that government subsidies apply only to vehicles produced within Europe. Initially, it covered only European automakers, but the proposed revision would extend eligibility to so-called “trusted partners” from the aforementioned three countries. The rule primarily applies to government fleet vehicles and corporate car fleets, which together account for approximately 60% of new vehicle registrations in Europe. Eligible vehicles would benefit from tax incentives, including exemptions or reductions in taxes levied on official vehicles. This adjustment is seen as a significant boost for UK, Japanese, and South Korean automakers, helping them address competition from Chinese manufacturers and overcapacity issues. For the UK’s automotive industry, the move could alleviate the prolonged uncertainty it has faced since Brexit. Nissan previously warned that its Sunderland plant in the UK might face closure if it did not receive policy support; the revised rules are expected to eliminate this risk. Several major automakers have already submitted recommendations to European Commission President Ursula von der Leyen, stressing that preserving the well-established, integrated supply chains between Europe and the UK, Japan, and South Korea better serves the EU’s overall interests. Moreover, overly strict definitions of “Made in the EU” could also negatively impact European automakers themselves, many of which rely heavily on overseas-sourced components.