EU local manufacturing and battery regulation

The European Union is implementing a ‘Made in Europe’ strategy to reduce external dependencies by increasing regional production of goods and components. This initiative aims to secure technology, manufacturing capacity, and jobs.

However, the automotive industry has raised concerns regarding the speed of this transition. Under the Industrial Accelerator Act, vehicles must feature components that are 70% European-sourced to qualify for state incentives and public procurement advantages. The current proposal requires certain battery components to be sourced from Europe within six months of the regulation’s adoption, eventually expanding to more components over three years.

Industry representatives, including the European Automobile Manufacturers' Association (ACEA), are calling for these timelines to be extended to three and five years. Manufacturers warn that the current supply chain cannot meet immediate targets, noting that sufficient supplies of critical cathode and anode materials may not be available until 2038. Additionally, recent setbacks in the regional battery ecosystem, such as Northvolt’s bankruptcy and the suspension of gigafactory plans by ACC, highlight the difficulty of meeting these requirements. Industry experts caution that if localization requirements outpace local production capacity, it could increase vehicle prices and strengthen the competitiveness of Chinese brands in the European market.