Volkswagen, Stellantis, and Renault Push EU for Aggressive ‘Made in Europe’ Auto Policy

Europe's three largest mass-market automakers have drawn a line in the sand. On Friday, Volkswagen, Stellantis, and Renault—collectively responsible for more than 60% of vehicle production in the European Union—sent a joint letter to EU lawmakers demanding a unified "Made in Europe" framework . The core of their proposal is a simple but aggressive formula: to qualify for state subsidies, 70% of vehicles sold in the EU should have 70% of their value derived from the 27-nation bloc .

This marks a significant escalation in the industry's push to counter a surge of affordable Chinese electric vehicles, and it sets the stage for a contentious legislative battle as the European Commission prepares its sweeping Industrial Accelerator Act .

The 70% Rule and the Push for Battery Sovereignty

The proposal’s headline demand is a stringent 70% local content threshold that would apply across the entire value chain. The three automakers argue this is not just a defensive measure but a necessary condition for fair competition and strategic resilience . They specifically call for a “simplified, realistic, and robust” definition of what counts as a European component, warning that vague rules would undermine the policy’s intent .

Beyond assembly, the letter highlights an acute vulnerability in the supply chain: battery cells. The CEOs openly acknowledge a conflict between the short-term pressure to import cheaper batteries and the long-term need for strategic independence. They urge the EU to channel taxpayer money in a “targeted manner to promote European production” across the entire battery value chain, stating that without this support, the local content goals for lower-cost EVs will be impossible to meet .

Regulatory Flexibility for the EV Transition

The proposal doesn't rely solely on local content mandates. The automakers are also demanding regulatory flexibility, specifically targeted at making electric vehicles more affordable. They argue that without aligning EU rules to reduce cost pressures, the 70% target will disproportionately punish the mass-market segment where margins are thinnest and the temptation to import cheap batteries is highest . This aligns with earlier joint demands from VW and Stellantis CEOs for CO₂ bonuses to be applied specifically to vehicles with a “Made in Europe” label, effectively creating a dual incentive system .

Context: The Industrial Accelerator Act

The legislative vehicle for these demands is the EU’s proposed Industrial Accelerator Act. The European Commission has been drafting rules that would tie state purchase incentives for new battery-electric, hybrid, and fuel-cell vehicles to EU assembly and local component sourcing . The draft regulation, expected to be a key part of a broader auto-sector rescue package, would require EVs to be assembled in the EU and source at least 70% of their components locally to qualify for subsidies .

Deep Industry Divisions and the Specter of Trade War

The united front from VW, Stellantis, and Renault is not a consensus position. The proposal has exposed a deep fissure within the global auto industry, with significant opposition from major manufacturers who fear the consequences of a protectionist spiral.

Toyota and Jaguar Land Rover have explicitly warned that the rules threaten investment and jobs by raising costs and disrupting complex, globally integrated supply chains . BMW has raised flags about increased costs and the bureaucratic burden the system would impose . The rift largely falls between European mass-market brands, who feel the most direct heat from Chinese imports, and global premium or non-European players whose supply chains are less EU-centric .

The risk of trade retaliation is not theoretical. Reuters has reported that the EU is navigating a “delicate path,” as a strict local-content regime risks a backlash from major trading partners like the United States and China . The industry's own hesitancy is clear: earlier this year, many automakers declined to endorse the EU commissioner’s initial push for a “made in Europe” strategy, signaling profound disagreement on how to fight Chinese competition without starting a trade war . Even Renault, now a co-signatory of the 70% proposal, previously warned against setting the threshold too high, cautioning that it could become impossible for carmakers to hit .