Industrial Accelerator Act: the EU’s positive turning point for industry, automotive and batteries

The European Commission has presented a proposal for a regulation called the Industrial Accelerator Act, with the aim of strengthening the Union’s industrial capacity and accelerating the decarbonisation of several sectors considered strategic.

This initiative should be read within a broader framework. In recent years, Europe has had to deal with a dual challenge: on the one hand reducing emissions and driving the energy transition, and on the other protecting and revitalising its manufacturing base. This is exactly where the logic of the proposal fits in. The core idea is simple: to make decarbonisation not only an environmental challenge, but also an opportunity to consolidate European industrial production.

According to the Commission’s communication accompanying the proposal, the measure is part of the European initiatives dedicated to industrial competitiveness and aims, among other things, to support the development of manufacturing within the Union, reduce strategic dependencies on third countries and encourage the deployment of clean technologies.

In short, this is not just about rules. It is about a more explicit industrial vision. Europe wants to produce more within its own territory, strengthen strategic value chains and reduce vulnerability linked to components, materials and technologies coming from outside the Union.

What the Industrial Accelerator Act is and why it matters

The proposal establishes a framework of measures designed to accelerate European industrial capacity and decarbonisation in sectors considered strategic. It is therefore not a measure limited to a single industry, but a broader framework that brings together industry, supply chains, sustainability and competitiveness.

Among the objectives identified by the Commission is also the strengthening of Europe’s manufacturing base, with a very clear target: to make industry account for 20% of EU GDP by 2035.

This figure helps explain the scale of the proposal. The point is not simply to support a few more investments or introduce a new regulatory label. The point is to bring industry back to the centre of Europe’s economic strategy, in a way that is consistent with the energy transition and with the need to reduce external dependencies.

Ultimately, the question the regulation is trying to answer is this: how can Europe remain competitive, decarbonise and at the same time preserve its productive strength? The Industrial Accelerator Act was created precisely as an attempt to offer a concrete answer to this balance.

The strategic sectors identified by the proposal

The regulation identifies several priority areas on which to focus action.

The first concerns energy-intensive industries. These sectors are fundamental to Europe’s industrial structure, but they are also among the most exposed to pressure from energy costs, global competition and the need to invest in reducing emissions.

The second is the automotive industry. This is no surprise. Automotive is one of the historic pillars of European manufacturing and is now at the centre of a profound transformation, driven above all by electrification, the evolution of components and the growing importance of the battery value chain.

The third area includes net-zero technologies, including batteries. This step is particularly significant because it clarifies an essential point: the Union does not only want to use clean technologies, it also wants to strengthen their production within its own territory.

Put more clearly, the goal is not simply to buy clean technology from abroad. The goal is to develop industrial capacity in Europe, so that the energy transition also generates production, employment, innovation and internal added value.

Union origin requirements and the “Made in EU” principle

One of the most relevant aspects of the proposal is the introduction of Union origin requirements and low-carbon criteria, intended to apply in particular to public procurement and public support schemes.

Here, the logic of the measure becomes very clear. Europe wants to ensure that, whenever public demand or public support comes into play, European industrial content carries greater weight. In other words, the “Made in EU” principle is not invoked as an abstract political formula, but as an operational criterion capable of shaping the market.

The proposal also provides that the Commission may adopt delegated acts to define which third countries may be considered equivalent to the Union in this respect. That decision should be taken within six months of the regulation entering into force.

This point is important because it shows that the proposal is not based on automatic closure towards the outside world. Preference for European origin remains central, but room is left to recognise equivalent situations where the Commission considers it appropriate.

Origin requirements for electric vehicles

The proposal gives particular attention to electric vehicles, providing specific criteria for considering them to be of EU origin within public programmes and procurement procedures.

The requirements listed are two.

The first is that the vehicle must be assembled in the Union.

The second is that at least 70% of the value of the components, excluding the battery, must be of EU origin.

This step is highly relevant because it shifts the focus to the actual content of the value chain. It is no longer enough to look at the finished product. It becomes essential to assess where the components come from and where the industrial value is effectively concentrated.

This is a substantial difference. It means that the regulation looks not only at the commercial presence of a product on the European market, but at its concrete industrial footprint within the Union.

The battery issue: a more detailed framework

For batteries, the proposal introduces even more precise requirements, confirming their strategic role.

It is envisaged that the battery must contain:

• at least three main components originating in the EU, including the cells; or

• at least five main components originating in the EU, including cells, cathode active material and the battery management system (BMS).

The meaning of this choice is quite clear. The Commission does not want Europe to remain confined to the final or less strategic stages of the value chain. Rather, it wants to encourage industrial anchoring even in the segments that are most relevant from a technological and manufacturing perspective.

The proposal then adds a further element: three years after the regulation enters into force, additional requirements relating to the share of European components for electric powertrains and electronic systems will also come into play.

This provision suggests a rather clear trajectory. The regulation does not simply set an initial threshold, but outlines a progressive evolution, intended to strengthen over time the required European industrial content.

Specific and simplified provisions are also envisaged for small electric vehicles in category M1E, in order to take into account the particular characteristics of this segment.

What changes in public procurement

Another central point of the proposal concerns public procurement.

The regulation introduces provisions aimed at limiting participation in public tenders by operators controlled by entities established in third countries that do not guarantee reciprocal access to the EU public procurement market.

In essence, the Commission wants to strengthen the principle of reciprocity. If European companies cannot rely on equivalent access to the public markets of certain third countries, the Union intends to reserve greater room to limit access to its own tenders in strategic sectors.

This is an important step because it turns public procurement into a more explicit industrial policy lever. In this logic, public demand is not only used to buy goods or services at the best possible price, but also to support objectives of industrial resilience and the strengthening of European value chains.

That said, the proposal provides for certain exemptions in cases where:

• no alternative suppliers exist;

• a significant increase in costs occurs;

• problems of technical incompatibility arise.

This is far from a secondary element. On the one hand, the Commission wants to steer the market. On the other, it recognises that the principle must take into account industrial reality, technical constraints and the economic sustainability of supply.

Low-carbon materials: steel and aluminium under scrutiny

The proposal also introduces specific requirements relating to low-emission industrial materials, especially with regard to buildings, infrastructure and civilian vehicles within public procurement and support schemes.

In particular, it provides that:

• at least 25% of the steel used must be low-carbon;

• at least 25% of the aluminium must be low-carbon and of EU origin.

According to the proposal, these requirements should apply from 1 January 2029.

Here again, the logic is very clear. Europe does not want merely to incentivise more sustainable final products. It also wants to stimulate demand for decarbonised industrial materials, while at the same time strengthening European production in the most relevant segments.

This is a choice that directly links industrial policy and climate policy. And, on closer inspection, this is one of the most interesting elements of the regulation: sustainability is not treated as a topic separate from manufacturing, but as a lever to reorganise and strengthen it.

Foreign direct investment: openness, yes, but with conditions

The proposal also addresses foreign direct investment, introducing specific conditions for investments above €100 million in strategic sectors.

Among the conditions envisaged are:

• a 49% cap on the shareholding participation of foreign investors;

• the possibility of requiring joint ventures with European partners;

• requirements relating to technology transfer, research and development activities, and the integration of European value chains.

This is one of the most delicate passages in the entire proposal, but also one of the most significant. The message, essentially, is that Europe still considers international capital important, but in strategic sectors it wants those investments to produce concrete industrial spillovers as well.

The entry of capital in itself is therefore not enough. What matters is the way in which that investment fits into Europe’s productive capacity, research, know-how transfer and the development of internal value chains.

Industrial acceleration areas

Another important element is represented by the industrial manufacturing acceleration areas.

The proposal states that Member States will have to designate at least one industrial acceleration area within 12 months of the regulation entering into force.

In these areas, the following are envisaged:

• simplified permitting procedures;

• coordinated planning of energy infrastructure.

This step deserves attention because it touches on a very concrete issue. Often, the problem is not only attracting investment or defining an industrial strategy, but being able to turn it into plants, projects and production capacity within timelines compatible with the market. This is precisely where permitting, energy availability and infrastructure coordination come into play.

In this sense, the acceleration areas could become a useful tool for making industrial policy more concrete and less slowed down by lengthy or fragmented procedures.

Possible implications for companies

For companies, the Industrial Accelerator Act opens up an interesting but also rather demanding scenario.

On the one hand, those already producing in Europe or those with a supply chain containing a strong European component could benefit from a more favourable context, especially in public markets and support schemes. This could particularly concern companies active in automotive, batteries, industrial materials and clean technologies.

On the other hand, the proposal will likely require a greater level of supply chain control. Companies will have to be able to demonstrate the origin of components, verify the share of value generated within the Union, trace the materials used and assess compliance with low-carbon criteria.

In other words, it will not just be about selling competitive products. It will become increasingly important to demonstrate how those products are built, with which components and with what degree of European industrial anchoring.

For some companies, this may represent an advantage. For others, it will be an invitation to review sourcing strategies, industrial partnerships and production localisation.

Points to watch closely

The proposal has an ambitious and overall positive approach, but it also presents aspects that will be important to monitor.

The first concerns the actual capacity of European industry to respond to the demand that the regulation aims to steer. Setting stricter criteria can certainly stimulate investment, but the decisive question will be whether European supply can grow with sufficient speed and competitiveness.

The second concerns costs. In some cases, at least initially, origin requirements or low-carbon criteria could make procurement more expensive. Unsurprisingly, the proposal provides for exemptions precisely where cost increases become significant or where there are no viable alternatives.

The third concerns implementation complexity. Demonstrating the origin of components, qualifying low-emission materials, defining equivalence with third countries and correctly applying the new rules in procurement will require clear criteria and a well-structured implementation phase.

And yet, beyond these elements, the direction of the proposal appears constructive. The aim is to turn some European vulnerabilities into an opportunity for industrial strengthening.

Next steps

It should be remembered that the Industrial Accelerator Act is, for the time being, a proposal for a regulation. It will therefore have to go through the European legislative process and may be amended during discussions between the Union’s institutions.

This means that thresholds, criteria and implementation methods could still evolve. However, the overall direction already seems to be outlined with a fair degree of clarity.

The Industrial Accelerator Act is a proposal worth paying attention to because it tries to bring together objectives that are too often addressed separately: industrial competitiveness, the energy transition, strategic autonomy and the development of European value chains.

The novelty lies not only in the fact that the Commission has presented a new regulation. The novelty lies above all in the type of approach that emerges: using public procurement, public support, origin criteria, investment rules and permitting simplifications to strengthen European production in strategic sectors.

For automotive, batteries, energy-intensive industries and industrial materials, this is an important signal. Certainly, the text will still need to be discussed and may undergo changes.

In summary, Europe appears willing to take a further step: not merely to chase the transition, but to use it to build a stronger, more modern and more deeply rooted manufacturing base on its own territory. And that, ultimately, is what makes the Industrial Accelerator Act a proposal worth following closely.