EU Imposes 70% Local Content Requirement on Electric Vehicles with the IAA

Key Information

The European Union is set to adopt the Industrial Accelerator Act (IAA), requiring electric vehicle (EV) manufacturers receiving public support to ensure that 70% of their vehicle content is of European origin. This requirement aims to strengthen the EU's industrial sovereignty and reduce reliance on non-European supply chains, especially for batteries.

Key Points

• 70% of components in state-supported EVs must come from European suppliers;
• 25% of the aluminum used must be "low-carbon," as must the steel, which will also need to meet this threshold, though without strict origin requirements;
• Rules have been relaxed so that certain third countries may now be treated as part of the EU for public procurement of key industrial products.

Context and Challenges

This provision is part of the "Made in Europe" strategy, intended to reduce external dependencies in critical sectors. At a time when the European automotive industry is experiencing a contraction (manufacturing PMI at 49.5 in January 2026) and significant job losses (over 100,000 since 2024 according to CLEPA), the IAA aims to reinforce local manufacturing, notably in response to Chinese dominance in strategic battery minerals (lithium, graphite, cobalt).

Moreover, this Act complements ongoing initiatives like ResourceEU and the Critical Raw Materials Act (CRMA), already in place to diversify Europe’s sources of critical raw materials.

Impact for Professionals

For importers, exporters, and customs declarants, these requirements will change the nature of origin proofs and increase import controls. Manufacturers will need to overhaul their supply chains to involve more European suppliers and better document traceability. Automotive industry players must adapt their sourcing of raw materials, with new focus on the carbon content of metal components. Logistics sector professionals will have to apply stricter regulations regarding origin certification and ESG reporting.

Next Steps

Official adoption of the IAA is expected in the coming months. The precise implementation modalities, including the recognition of certain third countries, will be detailed by the Commission once the text is confirmed. Operators should begin auditing their supply chains and anticipate contractual changes to ensure compliance ahead of the law’s entry into force.

“L’IAA va profondément rebattre les cartes de l’approvisionnement en pièces automobiles, pesant sur la compétitivité et la conformité douanière des constructeurs européens.” (The IAA will fundamentally reshape the sourcing of automotive parts, affecting the competitiveness and customs compliance of European manufacturers.)