British media: 'Made in the EU' sparks divisions among car companies

The EU's goal of "Made in the EU" to protect its own industry has sparked divisions within the automotive industry. According to a report by the Financial Times, Renault, Trantis, and Volkswagen, which together account for over 60% of the EU's total vehicle production, submitted a proposal to EU policy makers on the Industrial Accelerator Act on the 12th, calling on the EU to establish clear regulations related to "Made in the EU" and introduce stronger incentive policies to support the local automotive industry. However, several non EU car companies, including Toyota and Jaguar Land Rover, have expressed concerns about this, warning that rising compliance costs may further push up car prices.

In March of this year, the European Commission announced the Industrial Accelerator Act, which requires that electric vehicles purchased or leased in public procurement procedures must be assembled within the EU, and that the EU's local production content of automotive components, except for batteries, must reach 70%. Renault, Trantis, and Volkswagen further call for a simplified framework: requiring 70% of vehicles in the EU market to have 70% of their component content sourced from the 27 EU member states, as well as Iceland, Liechtenstein, and Norway. The remaining 30% can still be opened to regions outside the European Union. The Financial Times reported that the three companies referred to this ratio as "fair," but it is expected to be questioned by other non EU manufacturers.

Renault, Strantis, and Volkswagen stated in their recommendations that European car manufacturers are facing unprecedented challenges due to significant technological gaps in strategic areas, intense global competition pressure, and sustained high energy, manufacturing, and regulatory costs. Reuters reported that the current demand for cars in Europe is still weak, with annual sales decreasing by about 3 million units compared to 2019.

In fact, the proposal of "Made in the European Union" has aroused strong dissatisfaction from a large number of car enterprises outside the European Union, and some car enterprises exporting vehicles to the European Union from Britain, Türkiye, Morocco and other countries have raised objections. According to the Financial Times, Toyota and Jaguar Land Rover have warned that the relevant rules may impact investment, employment opportunities, and industrial competitiveness in the region. Honda warns that the definition of "Made in the EU" should not be set too narrowly.

Jaguar Land Rover, owned by Tata Motors in India, stated that these proposals will increase manufacturer costs as manufacturers must provide evidence of the source of parts, and tasks such as preparing customs documents for small suppliers are very difficult. The Industrial Accelerator Act will bring additional costs to manufacturers and lead to an increase in European car prices, "Jaguar Land Rover said." The bill does not address the structural differences that make European manufacturing less competitive than China. "The Financial Times reported that a major challenge for the EU to promote localized production is the battery - the most expensive and critical component, whose supply chain is currently dominated by Chinese manufacturers.

It is worth noting that the current situation in the UK is awkward. The company warns that excluding the UK from this framework will have serious consequences for the entire industry: "Due to the interdependence between the two parties, replacing UK parts with EU parts may disrupt the stability of the UK automotive supply chain and may also affect the EU supply chain

As one of the largest automotive industry employers in the UK, Nissan has previously stated that it will close its flagship factory in Sunderland if the Industrial Accelerator Act comes into effect.