European Parliament considers 75% local component rule for vehicles

The European Parliament is considering a draft of the ‘Industrial Accelerator Act’ that could significantly impact automotive manufacturing in Europe. The proposal aims to strengthen strategic sectors and reduce external dependency by requiring that at least 75% of a vehicle's components—excluding the battery—be sourced from within Europe to qualify for certain public procurement and subsidies.

This increase from an initial 70% threshold poses challenges for manufacturers. For example, certain versions of the CUPRA Raval, which is manufactured in Martorell, Spain, along with the Volkswagen ID. Polo, could potentially fail to meet these new local content requirements despite being physically assembled in Europe. While the European Union seeks to ensure that public funds for electrification support local value creation rather than just assembly, the stricter rules risk excluding vehicles produced in European factories.