EU Prepares Subsidies for Electric Vehicles with Localization at 70%
On February 25, the European Commission will present the Industrial Accelerator Act project, which will determine the conditions for receiving subsidies for the purchase of electric vehicles in the EU. This was reported by Financial Times citing sources, and the information was also confirmed by Automotive News.
What is Known
To receive government support, cars will need to meet two main criteria:
- assembly in the territory of the European Union;
- at least 70% of components of European origin (the share may vary depending on the model's price). Exceptions are made for batteries, whose production still largely depends on Asia.
If the document is adopted, the new requirements will apply to electric vehicles, plug-in hybrids, and hydrogen-powered cars. The timing of the norms coming into effect, their legal form (regulation or directive), and whether centralized financing will be provided from the EU budget have not been clarified yet.
The Industrial Accelerator Act follows the 'Automotive Package' presented in December. It provides for a review of the ban on the sale of internal combustion engine (ICE) vehicles after 2035, and the Battery Booster program — supporting the European battery industry with €1.8 billion.
According to Automotive News, the new requirements will apply to national subsidies, meaning that funding will be provided by the EU member states themselves. Further clarifications are expected soon.
Reaction of Automakers
The initiative has received mixed reviews. Renault supports the proposal. Meanwhile, BMW and Mercedes-Benz are wary of possible retaliatory measures from China.
The head of Mercedes-Benz and president of ACEA Ola Källenius stated that he supports fair competition but urged to introduce regulation as cautiously as possible to avoid undesirable consequences.
Sources: FT, Automotive News
