Made with Europe

Stéphane Séjourné, Executive Vice-President at the European Commission, responsible for Prosperity and Industrial Strategy,. Photo: European Union 2026

 

The European Commission’s “Made in Europe” agenda aims to bolster EU-based production in key sectors through a combination of local content requirements and, increasingly, low-carbon criteria.

However, the initial text of the Industrial Accelerator Act (IAA) — the clearest articulation yet of what “Made in Europe” looks like in practice — has introduced more confusion than clarity for companies and investors.

Rather than setting out a coherent framework, the proposal combines unclear definitions with a patchwork of overlapping initiatives. The result is a system that is difficult to interpret and even harder to operationalise.

Take electric vehicles.

Here, the IAA attempts to translate “Made in Europe” into concrete rules by linking access to public funding to origin and sustainability requirements. In practice, this would mean EVs benefiting from public support needing to meet localisation thresholds of around 70% EU-origin components (excluding the battery), with stricter requirements phased in over time. Given that around three quarters of EVs benefit from public support schemes in the EU, these conditions are highly consequential. 

At the same time, the proposal broadens the concept of “EU origin” by allowing inputs from countries with which the EU has a free trade agreement or customs union to count towards these thresholds.

Even with this flexibility, key questions remain unresolved.

It is not yet clear whether eligibility would require final assembly within the EU, or whether production in partner countries could qualify. Nor is the list of eligible countries fixed: the Commission retains discretion to exclude partners on the basis of reciprocity, supply chain dependencies, or wider economic security concerns. In practice, this means access to support could hinge on shifting political judgments rather than stable, predictable rules.

Uncertainty also extends to adjacent measures. It remains unclear whether finished vehicles or components produced outside the EU could ever be treated as equivalent under related rules on corporate fleets or CO₂ supercredits. This is before considering further ambiguities around green steel requirements, the interaction with as-yet-unknown non preferential rules of origin, and the practical challenges of applying value-based thresholds that will inevitably fluctuate over time.

The Commission is betting that these measures will deliver tangible results. Its own estimates suggest the IAA could add €10.5 billion in value across the automotive value chain, preserve and create around 150,000 jobs in key industries, and generate gains in upstream sectors such as steel, aluminium and cement. The objective is not just to shift production, but to create “lead markets” for low-carbon industrial products and anchor investment in Europe.

Whether this will succeed remains an open question.

The framework relies heavily on Member State funding and implementation, which may struggle to match the scale and predictability of support available in the United States or China. There is also a risk that supply chains adjust in response to policy incentives without achieving the scale or cost competitiveness needed for long-term viability.

More fundamentally, the EU is attempting to strike a delicate balance between openness and control. Too rigid an approach risks disrupting supply chains and alienating trade partners; too flexible a system risks failing to shift production in any meaningful way.

But first things first: the rules of the game need to be comprehensible. Without that, the EU risks investment inertia rather than investment in Europe.