The European Union is set to introduce new 'Made in Europe' legislation that could significantly disadvantage the UK's car industry, a post-Brexit move that has raised concerns among manufacturers and the government.
New EU rules could exclude UK-built vehicles
Under the proposed Industrial Accelerator Act, strategic products, including vehicles, must contain a minimum number of EU-made components to qualify for public subsidies. For electric vehicles (EVs), 70% of components would need to be made in the EU to be eligible for cash grants or tax exemptions.
The rules are believed to be designed primarily to protect European companies from competition from new Chinese manufacturers. However, since the UK is no longer an EU member, the measure would effectively cut off UK-built vehicles from these benefits.
Industry and government respond
In its latest ZEV review report, the Department for Transport (DfT) stressed that the automotive industry has already raised concerns with the UK government about the impact of the proposals. The DfT noted: “Lower than anticipated ZEV demand sits alongside wider factors affecting the UK automotive sector, including comparatively high UK energy and labour costs, tariffs and trade barriers, supply chain risks, and uncertainty around future regulatory developments.”
The DfT added: “This includes concerns about the EU’s proposed ‘Made in Europe’ measures which, although not yet legislated, could have a detrimental impact on the UK automotive sector if the UK were excluded. Together, these factors have created a more challenging operating environment, affecting competitiveness and confidence across the industry.”
Manufacturers warn of consequences
Jaguar Land Rover has previously warned that the proposals would likely increase costs for manufacturers. Toyota has also cautioned that the rules could “undermine future investment, jobs and technology transfer.”
The Society of Motor Manufacturers and Traders (SMMT) has warned that the rules would effectively shut UK-assembled vehicles out of European markets. A representative from the SMMT, identified as Mike, said: “We are the EU’s biggest export car and parts market, just as they are ours.” He added that this was a problem for the UK but also a threat to European industrial competitiveness.
Government engagement and next steps
The DfT said it has started engagement with the EU over the issue and is actively seeking opinions from stakeholders about how to respond. The DfT stated: “The UK government is committed to its international commitments under the World Trade Organisation and relevant bilateral trade agreements, and is working with the EU on its proposals to ensure UK industry is not unfairly disadvantaged. To help address the concerns raised, this consultation is inviting views on potential avenues for responding to the EU’s Industrial Accelerator Act proposal.”
