Business 17 February 2026, 8:12am

Portfolio

According to the draft obtained by the newspaper, new electric, hybrid and fuel cell vehicles that are covered by state subsidies or procured through public contracts

must be assembled in the European Union.

At least 70% of the parts, excluding the battery, would also have to be of EU origin, calculated on a value basis. Several key battery components would also have to come from the EU.

According to draft legislation seen by the Financial Times, the European Commission will stipulate that, in order to qualify for government subsidies or benefit from public contracts, at least 25% of products made from aluminium and 30% of plastics used for windows and doors in the construction sector must be manufactured in the EU.

The legislative package forms part of a comprehensive series of measures intended to save the EU's €2.6 trillion manufacturing industry. The industry is currently facing challenges from cheap Chinese competition, high energy prices and the cost of complying with strict climate protection regulations. These factors have already resulted in factory closures and large-scale redundancies.

According to industry experts, meeting the origin requirements for batteries could be very challenging, given that the electric car industry relies heavily on China for battery technology and raw materials.

The 70% threshold is still in square brackets in the draft, suggesting that the final figure is still under discussion.

Intense lobbying activity surrounds the proposed legislation. Representatives of clean technologies, such as renewable energy and battery manufacturing, as well as suppliers, support the local production requirements. However, car manufacturers are divided: BMW is warning of unnecessary costs and increased bureaucracy, whereas Volkswagen and Stellantis are in favour of a 'Made in Europe' incentive system. Other manufacturers are pushing for local content requirements to be extended to production centres outside the EU, including Türkiye and the UK, as well as key trading partners such as Japan.

Cover photo: EU