EU's New Law Divides Automotive Industry

The EU's new law to accelerate European industry (Industrial Accelerator Act – IAA) is causing division in the automotive industry, separating car manufacturers and parts suppliers.

Car manufacturers are concerned that the 'Buy European' preferences will increase costs and undermine global supply chains, while suppliers argue that the rules will protect jobs and domestic factories.

The law aims to strengthen green production with strict local content rules, including electric vehicles and batteries. The Commission presented it as a measure to protect EU industries.

Industry Commissioner Stéphane Séjourné stated that Europe should be an integrated industrial base and not just an assembly platform. However, car manufacturers consider the IAA as one of the most disliked legislations.

The EU car suppliers' pressure group, CLEPA, signed the law, arguing that it takes into account unfair competition. Jeff Peters, head of government affairs at CLEPA, said it is an important moment for suppliers.

At the heart of the disagreement is what is considered European. Car manufacturers have created global supply chains to reduce costs. A previous draft excluded partners such as Morocco, but the final proposal included them.

BMW expressed dissatisfaction, calling the proposal 'counterproductive'. Suppliers warn that competitors could circumvent the requirements by creating production units in trusted partner countries.

Previously, suppliers and car manufacturers worked together to weaken CO2 emission targets for 2035, but this brought the current disagreements to the surface.

The European Commission's proposal must be approved by the European Parliament and member states.

Source: OT