A Local Content Rule That Redistributes the Cards

The Industrial Accelerator Act, proposed by the European Commission in March, reserves purchase subsidies, state aid and public procurement for electric, plug-in hybrid and hydrogen vehicles assembled in the Union. At least 70% of the value of their components, excluding the battery, should also be of European origin. The stated aim is to defend the continent's factories against Chinese competition.

The Mechanism: Industrial Footprint Takes Precedence Over the Origin of Capital

The criterion concerns the geography of production, not the nationality of the brand. That is where the scheme partly turns against its own intent. BYD plans to launch series production at its Szeged plant in Hungary by the end of the year. Chery already assembles cars in Spain, at a former Nissan factory. According to analysts, their locally manufactured models could reach the 70% threshold without much effort.

The case of Tesla points the same way. Its Model Y, produced in Germany, was in September the best-selling car in Europe across all powertrains, with 40,971 registrations, up 55% year on year (provisional figures). Local production can therefore benefit a non-European brand first and foremost.

Toyota, First Exposed

The Japanese manufacturer stacks up the handicaps. Its bZ4X and C-HR+ come from Japan, and the electric variant of the Urban Cruiser comes from India. Only its Proace utility vehicles are built in Europe, as they are rebadged Stellantis models. In 2025, Toyota imported €6.9 billion worth of vehicles from Japan. Under the current draft, these models would be excluded from subsidies while those from BYD's Hungarian plant could qualify.

Limits Not to Be Ignored

The text remains a draft under discussion by the European Parliament and member states: the 70% threshold and its calculation method may still change. Opponents, including Toyota and Jaguar Land Rover, argue it will drive up the price of electric vehicles. One analyst rejects the argument, estimating that some European manufacturers must reorganize their supply chains regardless. No hard data allows a definitive ruling.

Another risk is more structural. The scheme counts the value of parts, not the place of design: plants could stay in Europe while research, development and engineering move to China. The association of European manufacturers itself considers protecting plants legitimate, but fears an upheaval of long-established supply chains. Finally, the international trade statistics that would have allowed measuring the effect on flows are not available here: the analysis rests on sector facts rather than trade volumes.

A Proportionate Conclusion

As drafted, the mechanism rewards local industrial footprint more than the origin of capital. Manufacturers already established in Europe — Chinese, American or European — are its potential beneficiaries, while importers will have to either relocate or forgo subsidies. The final outcome will depend on the threshold retained, its calculation and any eventual inclusion of R&D.

This article was written with the assistance of artificial intelligence and verified by our editorial team.