A plan by the European Union to introduce stricter guidelines for locally made vehicles is drawing criticism from partners and competitors across the auto industry.
First things first: The plan, unveiled Tuesday, would introduce “Made in the EU” rules for the bloc’s auto industry as part of a proposed Industrial Accelerator Act aimed at strengthening the EU’s position in a rapidly changing market, Reuters reports.
The EU, which includes major auto hubs Germany, France, and Italy, has struggled amid intensifying competition from Chinese automakers and the pressure of U.S. tariffs.
In January, new EU car registrations fell 3.9% year over year, largely due to declines in sales of gas-powered vehicles as lower-priced Chinese EVs gain traction in the region.
German car exports to the U.S. fell 14% in the first three quarters of 2025, with autos among the hardest-hit sectors from tariffs.
Under the plan, an EV would need 70% of the cost of its parts to be manufactured in the bloc, excluding the battery, to qualify for EU subsidies.
What they’re saying: "If we don't do this, there will be massive relocations," said Christophe Perillat, the CEO of French auto supplier Valeo, per Reuters. "I've never seen an industry go and come back."
Why it matters: “Buy local” rules can reshape vehicle pricing, incentive eligibility, and availability—especially for models relying on non-EU supply chains.
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Zooming in: Critics say the “Made in the EU” plan collides with the reality of cross-border manufacturing and deep supply ties to non-EU countries.
The proposal counts parts from EU member states, plus Iceland, Liechtenstein, and Norway, as local content, though the Commission has signaled that it may also consider certain “trusted partners.”
Ford’s European supply chain depends heavily on Britain and Turkey, with the automaker’s European president Jim Baumbick warning that excluding those countries “would weaken production inside the EU itself.”
Also worth noting: The Commission’s “Made in the EU” push mirrors a broader global shift toward using trade and industrial policy to steer auto investment at home, similar to moves underway in Canada, raising the odds of retaliatory measures and higher costs across supply chains.
Bottom line: The EU is trying to lock more of the EV value chain inside its borders, but the fight will be in the details—who counts as “local,” what qualifies for subsidies, and how quickly rules take effect. Dealers should brace for uneven incentive eligibility and model-mix volatility as OEMs and suppliers adjust sourcing to keep vehicles subsidy-eligible.
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