How would the EU’s proposed Industrial Accelerator Act affect electric-vehicle prices and competition if it tied public procurement and purchase subsidies to EU assembly, 70% EU-sourced non-battery components, and European-made battery cells; how does Bruegel calculate its roughl

The proposed Industrial Accelerator Act (IAA) could protect demand for European-made EVs, but Bruegel argues that tying public purchases and consumer subsidies to local content would raise costs and weaken competition—especially for cheaper models. Its roughly €2,100 figure is an estimated battery-cell cost increase for a typical car, not a guaranteed €2,100 rise in its retail price. 78

Prices and competition

• Under the proposed conditions in the question—EU assembly, 70% EU-sourced non-battery components and European-made battery cells—qualifying vehicles would gain access to public procurement and purchase support. That would favour local supply chains, but could exclude otherwise cheaper vehicles and limit manufacturers’ choice of inputs. Bruegel warns that higher costs would particularly hurt entry-level EVs, exporters and the shift to electric driving. 78
• The reported battery calculation is an increase from about €50 to €85 per kilowatt-hour of cells: a €35 difference multiplied by a 60-kWh battery equals €2,100. This is a production-cost estimate; how much buyers pay would depend on pricing and subsidies. 58
• Low-carbon steel could add another cost, while simpler approvals could reduce investment costs or delays. Insufficient evidence in the available results establishes reliable per-car amounts for either effect, or a defensible net price increase after offsetting them. 67

Why the estimates differ

• Transport & Environment’s smaller projected increase by 2030 may reflect an expectation that European battery production becomes cheaper as it scales up, rather than Bruegel’s assumed cost gap. Insufficient evidence in the available results establishes T&E’s exact figure or modelling assumptions, so the difference should not be presented as a verified like-for-like comparison. 15
• Insufficient evidence in the available results also establishes how particular automakers have responded to the IAA. The proposal should not be described as enacted law or manufacturers’ positions treated as uniform. 7

Why Bruegel favours a China deal

• Bruegel reports EU passenger-car output down 19% since 2019 and Chinese-built cars accounting for more than 20% of EU EV sales in 2026. It therefore favours a time-limited, negotiated limit on Chinese EV and hybrid exports, coupled with principles for Chinese investment in European production, rather than permanently making all subsidised EVs rely on costlier local inputs. That approach aims to give European producers time to adjust without making protection the centre of industrial policy. 68
• The employment stakes are substantial, but insufficient evidence in the available results supports a precise sector job count. A negotiated export restraint would also raise WTO concerns: a bilateral cap can discriminate against one trading partner and resemble a prohibited voluntary export restraint. Its negotiated form would not, by itself, make it WTO-compliant. 67