EU car rescue plan sparks industry civil war

EU car rescue plan sparks industry civil war

POLITICO — 2026-03-04

News from Brussels

The European Commission’s grand plan for rescuing the bloc’s ailing automotive sector is splintering carmakers from their own parts suppliers.

Carmakers argue the Buy European preferences in Wednesday's Industrial Accelerator Act will increase costs and undercut their global supply chains, while suppliers — companies that make everything from brakes to spark plugs — say the rules will safeguard jobs and domestic factories.

The IAA is aimed at protecting EU industries and boosting green production with strict local content rules, including for electric vehicles and batteries. The Commission spun it as a godsend that will protect EU industries.

"Europe must be a complete industrial base. Not just a simple assembly platform," industry czar Stéphane Séjourné said at a press conference on Wednesday. "Without a strong industrial base, there can be no European social model, no climate transition, no strategic autonomy."

But automakers aren't buying it. For them, the IAA is one of the most universally loathed pieces of legislation to come out of Commission President Ursula von der Leyen's second term.

They have made no secret of their displeasure.

In recent months, Séjourné beseeched companies to sign on to a joint op-ed touting the legislation after he faced intense backlash from his fellow commissioners, national capitals and the EU's trading partners.

Not a single automaker signed. Even though Paris strongly backs the IAA, French brands like Renault and Stellantis also balked.

The bloc's CLEPA auto supplier lobby did sign, however, along with many of its members like German companies Bosch and Schaeffler.

"It's taking into account the reality of the business and the unfair competition that we are facing," said Geoffroy Peeters, CLEPA's head of government affairs. "It's an important moment for us and a promising start."

Deep divisions

At the core of the divide between suppliers and automakers is what counts as European in the legislation's preference requirements.

Globalization has allowed automakers to build highly integrated supply chains across markets, which has in turn lowered costs as they seek cheaper production sites and components.

Renault, for example, has extensive manufacturing facilities in Morocco, where it makes the Dacia Sandero that is Europe's top-selling vehicle.

An earlier draft of the IAA obtained by POLITICO cut out trusted partners like Morocco or the U.K., requiring a delegated act for them to be treated as Made in Europe. That prompted Paris to lobby on behalf of its automakers for Morocco to be considered European.

The final proposal reversed course, moving to an opt-out scenario where dozens of countries with free trade agreements with the EU — including Morocco, Turkey, Canada and Japan — are automatically considered European. That means the Commission has to proactively act to knock a country off the trusted partner list.

Foreign automakers like Honda breathed a sigh of relief at the change.

"As the act goes through co-decision, we will work with Parliament and Council to highlight the role that EVs assembled in Japan can play towards helping Europe meet its sustainable mobility goals," said Patrick Keating, Honda's head of government affairs.

EU automakers feel the watered-down version is better than the original, but they're still not pleased.

"Instead of addressing the root causes of insufficient competitiveness, the EU Commission is continuing its protectionist course with the Industrial Accelerator Act — the expectation that this will create new industrial jobs is unrealistic," BMW said in a statement, calling the proposal "counterproductive."

Suppliers, however, warn that if guidelines are loosened in the final version of the IAA, their competitors could circumvent the European preference requirements by setting up production in one of the trusted partner countries.

That's already happening with Chinese suppliers flooding the EU with their components thanks to overcapacity at home spurred by subsidies, Peeters said.

Former BFFs

Such sharply diverging views are uncommon for the automotive sector, which is typically aligned on European policies.

In one recent example, suppliers and automakers banded together to lobby the Commission to severely weaken the 2035 CO2 emissions targets.

But that victory contained the seeds of the current battle.

When the Commission put forward an automotive package in December aimed at watering down the 2035 rules, it came with a catch: Any flexibility on emissions standards was tied to the European preference requirements that were spelled out in the IAA.

The conflicting demands of the different parts of the car industry are layered on top of clashes among member countries and within EU institutions.

"I must admit that it was very hard to strike a political balance within the Commission," Séjourné said.

The Commission proposal still has to be approved by the European Parliament and member countries before becoming law.