EU's 'Made in Europe' push unnerves global auto suppliers
The European Union's Industrial Accelerator Act (IAA) is causing concern among allied carmaking nations like Turkey, Morocco, Japan and South Korea due to its requirement that vehicles must be produced in Europe to qualify for subsidies.
Proposed in March, the IAA seeks to upgrade European car factories and only subsidize vehicles produced in Europe. While Germany and France recently reached a compromise allowing suppliers from non-EU members like the United Kingdom and Norway to qualify for 'European origin' status, other key players will be excluded—particularly Turkey, which has enjoyed seamless access to the EU market since the mid-1990s.
Turkish exports at risk
Turkey's auto exporters association OIB calculated that the country's automotive exports to the EU totaled $30.1 billion (€26.8 billion) last year. Ayhan Zeytinoglu, chairman of the Economic Development Foundation (IKV), warns that excluding Turkey would be devastating for the country's auto sector.
Parts requirements
The IAA requires that 70% of a vehicle's components (excluding the battery) must be made in Europe. Initially, this only applies to battery-electric vehicles, plug-in hybrids and fuel-cell models, which made up just 27% of all new EU car registrations last year. Tommaso Pardi notes this target is remarkably generous, as average European-made electric cars already have around 83% European parts (excluding the battery).
Chinese influence concerns
A key reason for excluding Turkey is Chinese automakers' expansion there, hoping to gain back-door access to the EU market. SWM Motors' factory in Eskisehir closed within a year due to failing EU safety standards, while BYD's $1 billion plant in Manisa has been put on hold. Morocco has received Chinese investments worth over €10 billion since the pandemic, making it a crucial low-cost production hub for French carmakers.
Industry divisions
The EU should offer access to the IAA through an opt-in mechanism with objective criteria: regulatory alignment, social and environmental standards, no market distortion, respect for the rule of law and reciprocity, backed by anti-circumvention measures. Partners that meet them are welcome.
European car giants are lobbying to water down the IAA to protect profit margins, while European auto-parts suppliers call for further strengthening of the legislation. CLEPA's Benjamin Krieger warns that up to 650,000 auto jobs could be lost by 2035 without better protection, stating: 'We must stop the bleeding.'
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