Value creation in the European automotive industry is under pressure. An unfair global playing field combined with a structural competitive loss of 15 to 35 per cent could lead to a loss of up to 23 per cent of value creation per vehicle within five years. In the short term, this puts pressure on up to 350,000 jobs in the European supply chain.
CLEPA, the European automotive suppliers' association, warns of this, based on a study conducted in collaboration with Roland Berger. In doing so, it stresses the importance of measures to protect the European industry, which it says are necessary until structural competition problems are resolved. These measures, according to CLEPA, help embed value creation in Europe, contributing to European employment, technological leadership and supply chain resilience.
Industrial Accelerator Act
CLEPA also believes the Industrial Accelerator Act (IAA) has an important role to play . The act recognises automotive suppliers as a strategic sector facing increasing global distortions and unfair competition. CLEPA argues that the IAA is badly needed. For instance, in 2024 and 2025, a total of more than 100,000 jobs have been announced to be at risk. Recent surveys also show that around half of European car suppliers are considering reducing production capacity in the EU in the coming years.
Dhe effectiveness of the IAA According to the association, depends from the consistency, enforceability and ambition. If crucial gaps are not addressed, the IAA risks the concept of ''Made in Europe' remains symbolic rather than impactful, warns CLEPA. It argues that dhe priority should be at a robust and workable framework that delivers tangible industrial results, without unnecessary administrative burdens.
Recommendations
CLEPA comes up with a series recommendations for the IAA to adequately protect the European automotive industry:
1. Maintain an ambitious definition of 'European vehicles'
The proposed definition of 'European vehicles' is a core part of the IAA and must According to CLEPA remain sufficiently ambitious to reflect the value creation of the European automotive supply industry. The current threshold of 70 per cent local content ensures that automotive technologies and manufacturing capabilities for electric vehicles remain in Europe. CLEPA warns that eand lowering this threshold reduces the effectiveness of incentives to locate production in Europet and ultimately undermine the goal of maintaining industrial capacity, investment and employment in Europet.
2. Open trade must not facilitate circumvention of obligations
While respecting international trade commitments remains essential, excessive openness may defeat the goal of strengthening European industrial capacity According to CLEPA undermine. The current framework runst according to the association risk enabling circumvention through third countries, especially when production is moved to jurisdictions that benefit from preferential trade agreements with the EU.
CLEPA advocates a more targeted and risk-based approach to trading partners to ensure that the framework supports genuine industrial cooperation rather than facilitating regulatory arbitrage. In this context, CLEPA also stresses the importance of close industrial cooperation with the UK, partly because of the deep integration of automotive supply chains. Reciprocity and a level playing field in terms of costs, regulatory alignment and market access should be central to this.
3. Ensure consistency between all support mechanisms
CLEPA argues that het current proposal inconsistencies contains tus between the eligibility criteria for different instruments, such as vehicles eligible for public procurement, public support, commercial vehicles and vehicles eligible for supercredits. So the definition for M1e vehicles differs from that for other vehicles by leaving the choice between sourcing battery components in the Union or vehicle components in the Union. These inconsistencies may According to CLEPA lead to regulatory complexity and weaken the effectiveness of the framework, while reducing predictability for manufacturers and suppliers.
4. Adjust the price differential surcharge to make the framework effective
The current escape clause allows competent authorities or public support schemes to reduce origin requirements from the EU ignore if compliance would lead to a cost increase of more than 25 (or 30) per cent compared to alternative offers. CLEPA warns that this risks leaving the framework insufficiently effective is In supporting the European manufacturing. Structural cost distortions and the unfair global playing field mean competitive vehicles can from Chinese manufacturers in particular are more than 30 per cent cheaper than European alternatives. CLEPA warns that this can lead to the escape clause being triggered frequently, which significantly limits the effectiveness of the framework to boost European manufacturing.
5. Foreign direct investment requirements should reflect industrial realities
The introduction of foreign direct investment (FDI) requirements is according to the association eand positive step, which before can ensuring that framework-related investments contribute to European value creation and industrial capacity. The proposed investment threshold of €100 million for the battery and EV value chain runst however, risks excluding a significant portion of investment by the automotive supply industry, where innovation and production capacity are often developed through smaller but strategically important projects.
6. Ensure broad and effective market coverage: the IAA is not the holy grail
Currently falls only 20 to 30 per cent of vehicles under the IAA. Framework's ability to respond to The growing presence of low-cost electric vehicles from China and the risk of further delocalisation is therefore, according to CLEPA limited.
The heavy reliance on national public support schemes simultaneously creates fragmentation and uncertainty. Differences in member states' fiscal capacity and policy choices can lead to 27 divergent frameworks, undermining coherence, predictability and overall effectiveness. CLEPA also argues that, as electric vehicle markets mature, such subsidies are likely to be reduced or phased out. This weakens the impact of local content measures.
The association therefore calls broader and more structural market coverage essential to ensure the long-term effectiveness of the framework and its ability to anchor value creation in Europe. CLEPA advocates complementing the IAA with additional policy instruments and structural measures to address the automotive sector's competitive challenges and achieve sustainable results. The association also calls for recognition of the role of both battery-electric vehicles and plug-in hybrids, which it calls crucial to ensure comprehensive market coverage and sustain value creation throughout the European supply chain.
