Boosting Made-in-EU EVs & Batteries with the Industrial Accelerator Act (IAA)

Transport & Environment (T&E) has welcomed the European Union’s Industrial Accelerator Act (IAA) as a promising step towards strengthening the continent’s electric vehicle (EV) and battery manufacturing capabilities. The IAA introduces a legal framework that prioritises Union preference and imposes conditions on Foreign Direct Investment (FDI), aiming to foster a resilient, low-carbon industrial base within Europe. T&E emphasises that the act could significantly boost the production of key EV technologies—including batteries, electronics, electric motors, chips, and software—within the EU, thereby supporting economic resilience, job creation, and climate objectives. Despite its positive outlook, T&E’s position paper highlights several critical loopholes in the IAA that must be addressed to ensure effective scaling of the European battery value chain. The organisation calls for stringent and consistent rules across all EV categories, insisting that subsidies and tax incentives should only apply to vehicles that incorporate locally produced batteries and components. T&E warns against exemptions that could allow EVs with non-European, particularly Chinese, batteries to qualify as Made-in-EU, which would undermine the act’s intent and weaken the domestic supply chain. A key focus of T&E’s recommendations is the need to concentrate on strategic components within the EV supply chain, such as battery cells and critical raw materials, rather than less critical parts like seats or bumpers. The organisation stresses the importance of developing local capacity across the entire battery value chain, including precursor cathode active materials (pCAM) and anode active materials (AAM), to ensure both manufacturing robustness and a competitive recycling industry. Moreover, T&E advocates for extending FDI provisions to cover all significant automotive and battery investments announced in the past three years, ensuring foreign investors commit to local supply chains. T&E also urges the EU to create lead markets for low-carbon steel and aluminium by mandating their use across all vehicle types, not just EVs. This would further embed sustainability into the manufacturing process and strengthen Europe’s industrial sovereignty. The organisation’s comprehensive recommendations aim to close existing gaps in the IAA, transforming it from a promising framework into a powerful tool for building a fully integrated, competitive, and climate-aligned EV industry within Europe.