Carmakers spurn Brussels’ ‘made in Europe’ bid
Companies divided on proposals that lay out minimum thresholds for locally produced parts and supplies
Carmakers have refused to back an effort by the EU’s industry commissioner to rally support from leading industries on its plan to prioritise “made in Europe” products, highlighting deep divisions over how to fight back against the influx of affordable Chinese vehicles.
Stéphane Séjourné, the European commissioner for industrial strategy, last week asked business leaders to sign an opinion piece calling for “made in Europe” policies that would reward companies with products using high levels of parts and supplies made in the region with public subsidies.
“We must establish, once and for all, a genuine European preference in our most strategic sectors,” Séjourné’s team said in the article seen by the Financial Times. “It is based on a very simple principle: whenever European public money is used, it must contribute to European production.”
More than 1,000 chief executives and industry associations have signed up to the initiative, including European trade body Clepa, German industrial conglomerate Thyssenkrupp and French tyremaker Michelin.
But five people with direct knowledge of the situation said the signatories did not include carmakers due to concerns about details on what would count as European and how the rules would be implemented in practice.
The so-called Industrial Accelerator Act was first due to be proposed on December 10 but was delayed until January 29 and has now been pushed back until February 25 in part due to concerns that Séjourné, who is overseeing the proposal, had gone too far.
EU officials outside of Séjourné’s inner circle said the proposal was “not ready” and there were concerns that it would not be workable. However, a member of his team said the unveiling of the proposal had been delayed “in order to maintain the very high level of ambition as it is discussed internally” and it was not going to be rushed out.
The controversial proposal involves dictating minimum levels of domestic content for strategic products such as batteries and cars to cut Europe’s reliance on China and protect local production against cheap imports.
For cars, officials had discussed a local content threshold of 70 per cent but carmakers have clashed over how stringent the conditions should be since their manufacturing operations are globally spread out.
There are also discussions over whether to lower some of the thresholds, which are individually defined for each component, and whether the number of sectors covered by the proposal should be more limited.
With the industry already struggling with the higher energy and labour costs in Europe, some companies including Renault, Stellantis and Volkswagen have supported the initiative in principle to reward local assembly and engineering.
But BMW chief executive Oliver Zipse has warned that Europe would fall behind the global innovation race by setting complex local content rules.
Others, even those based in the EU, have called for the “made in Europe” definition to be broadened beyond the bloc to include other manufacturing hubs such as Turkey and the UK as well as major trading partners such as Japan.
“If you start chopping up the European region [to exclude countries such as the UK], you’re just going to create a more uncompetitive industrial base in Europe,” said another person at a leading carmaker, warning that such a measure would burden European companies in the face of Chinese competition.
A draft of the IAA proposal seen by the FT has indicated that the “made in Europe” definition could be expanded to include countries with which the EU holds trade agreements. Critics have warned that this would undermine the main objective of boosting local production.
Being a signatory to Séjourné’s op-ed piece does not legally tie companies to the policy, but one person close to a European carmaker said the commission was trying to get auto groups to sign a “blank cheque” without revealing critical details of the proposal.
“We recognise that [carmakers] have been the only sector more hesitant to sign, with many of them highlighting that it did not mean a rejection in principle of European preference, but a precautious approach,” said Séjourné’s cabinet.
Volkswagen said a “made in Europe” strategy should avoid creating a “quota for everything” and called for the new requirements to be applied not only to individual cars but to define “overall targets” for manufacturers’ fleets.
Renault said it had “always supported local content measures” but acknowledged that it had not signed the draft opinion piece. “At this stage, we have not yet taken a position, as we are waiting for the details of the proposal.”
The idea of European content rules has long been favoured by France to protect its industry. The Nordic countries and Germany, which have historically had much more open markets, have been sceptical towards the idea.