Made in a Competitive Europe

At the recent European Forum for Manufacturing's debate in the European Parliament on the proposed Industrial Accelerator Act (IAA), one message stood out: Europe must urgently regain its competitive edge. Without decisive action, the gap to global competitors will continue to widen, eroding the industrial backbone that built modern Europe.

Nowhere is this shift more visible than in the automotive sector. Asia, led by China, now produces over 60% of the world's vehicles, while the EU's share has dropped below 15%. Competitive pressure is growing not only abroad but on our own roads, with Chinese-made vehicles now representing 7% of EU sales, while European exports are declining in key markets such as the United States and China.

Electrification further amplifies this divide. As the global race toward zero-emission mobility accelerates, Europe risks falling behind faster-moving competitors.

The response is not to retreat, but to reinforce Europe's own competitiveness. It must become the central guiding principle of industrial policy: ensuring access to affordable energy, securing critical raw materials, strengthening battery value chains, reducing administrative complexity, accelerating permitting, and securing export markets.

We therefore support the IAA's ambition of keeping added value in Europe, reducing strategic dependencies and preserving Europe's role as a major industrial power. Our industry operates in more than 250 factories across the EU and sustains over 13 million European jobs. Manufacturers are already investing billions to anchor the transition in Europe. We want the IAA to work and to become a true catalyst for industrial strength.

But let's be clear, "Made in Europe" mandates alone will not make that happen. A successful IAA must reflect what Europe's auto industry actually is: complex, globally connected, and already under severe pressure from shrinking markets, tariffs, and demanding decarbonisation targets.

Introducing "Made in Europe" requirements without addressing the underlying conditions for competitiveness might end up producing the opposite of the intended effect by weakening Europe's industrial base rather than reinforcing it and constraining the market instead of enabling its growth.

For the automotive sector, the best road to strengthen competitiveness lies with the CO2 standards. Europe's singular focus on battery electric vehicles (BEVs) risks placing it at odds with more technology-neutral approaches pursued in other major markets. This divergence can put European manufacturers at a disadvantage, limiting profitability, investment capacity, and long-term resilience.

At the same time, electric vehicle adoption is progressing more slowly than anticipated, as factors outside manufacturers' control, such as charging infrastructure, grid readiness, and inconsistent incentives continue to weigh on demand. The result is a growing disconnect between regulatory targets and market reality.

Without course correction, manufacturers face billions in penalties, or are left with only costly trade offs: scaling back production, buying credits from competitors (effectively transferring funds to non-EU companies, as seen with Tesla's $1.99 billion credit revenue in 2025), or heavily discounting EVs, which leads to lower profits and a drop in the vehicle future secondary values.

None of these outcomes strengthen Europe's competitiveness.

The good news is that policy can evolve. The recent automotive package was a step in the right direction, but more is needed to close the gap between ambition and feasibility. This includes urgent flexibilities for 2030, including a broader averaging regime and industrial perspective for plug-in hybrids; adjusting the 2030 and 2035 targets for vans; agreeing an unconditional 90% 2035 target for cars; workable compensation mechanisms for advanced materials and renewable fuels; and a review clause for 2029 to ensure the framework remains aligned with the market.

The automotive sector sits at the heart of Europe's industrial identity. Its capacity to thrive in the new global environment will shape the continent's economic and technological future. If Europe sets our industry the right conditions to compete, it will deliver and shape the next era of mobility, preserving the legacy started 140 years ago, right here, at home.