EU Car Industry Divided Over "Made in Europe" Strategy Against Chinese Competition

European car suppliers and manufacturers are divided over Brussels' "Made in Europe" strategy, an effort to shield the EU market from Chinese competition.

The EU car industry is facing fierce competition from China, threatening hundreds of thousands of jobs across the bloc. To address the issue, the EU is preparing the so-called Industrial Accelerator Act, which is designed to favour electric vehicles constructed mostly with European components in public procurement and public support schemes.

However, EU car suppliers and manufacturers disagree over the proposed law, currently under discussion by EU countries and the European Parliament, which sets a 70 percent local content threshold for electric vehicles.

According to the European Association of Automotive Suppliers (CLEPA), the Commission’s proposal is a step in the right direction. Based on a study commissioned from management consultancy Roland Berger that Euronews has seen, plug-in hybrid electric vehicles and battery-electric vehicles manufactured in Europe already contain between 80 percent and 90 percent made-in-Europe components.

Consequently, it considers the Commission's 70 percent threshold to be achievable.

But the European Automobile Manufacturers' Association (ACEA) is pushing for a different methodology, under which regulators would assess finished vehicles instead of the local content in vehicle components.

“A vehicle is far more than the sum of its parts. Its value also lies in the R&D, advanced engineering and highly skilled workforce behind it,” ACEA said in a position paper published on 1 July.

CLEPA responded that under this methodology, a finished vehicle would require only 50 percent EU-made parts and components, with the remaining 20 percent coming from R&D, design and other activities.

This 20 percentage-point dilution of the requirement for EU-made parts “could result in the loss of 350,000 jobs”, CLEPA warned, saying the Commission's component-level approach would “safeguard the existing manufacturing base".

“What we are looking at right now is significant competition from best-cost countries, and the dragon in the room is China,” CLEPA Secretary General Benjamin Krieger told Euronews.

"A 'Made in Europe' threshold that ignores where the actual parts are built is a label that ignores the European worker,” he said.