"Made in Europe" or "Made with China"? A fundamental question for the future of the European Union and its automotive industry

Résumé:

The “Strategic Dialogue on the Future of the European Automotive Industry” launched in January 2025 by the European Commission was meant to reach a more consensual and ambitious view on how to address the “Chinese challenge”, in particular via the introduction of local content policies to protect the European supply chain from aggressive Chinese economic dumping and avoid unfair competition from new Chinese assembly car factories in Europe. After more than one year of tensed negotiations, the final result - the Industrial Accelerator Act (IAA) proposed by the European Commission the 6th of March 2026 - is neither consensual, nor satisfactory.

In this presentation we argue that the current version of the IAA is not up to the task of meeting the Chinese challenge precisely because there is no consensus between member states and within the industry on how to proceed. 

The European Commission’s current proposal strives to strike an impossible compromise between conflicting approaches:

• the “Made in EU” approach, which can meet the “Chinese challenge” but requires a much more ambitious version of the IAA and a clear break from the WTO order;
• the “Made with China” approach, which currently gives to European carmakers a substantial margin to keep reducing their production costs via Chinese products and sourcing, but at the cost of both disrupting the European automotive supply chain and increasing the European dependence on Chinese companies, products and technologies;
• the “Made with Europe” approach, which tries to preserve the WTO order but at the cost of taking most of the substance out of the “Made in EU” approach.

We argue that the result is neither compatible with WTO rules nor effective in meeting the ‘Chinese challenge’ and addressing the new ‘world economic order’ imposed by the United States. On the one hand, it leaves the door open to a ‘Made with China’ approach championed by car manufacturers whilst introducing a watered-down version of the ‘Made in EU’ approach demanded by suppliers; on the other, it incorporates the principle of European preference into EU policies and regulations, but strips it of its substance by exempting the majority of EU car production from local content requirements and by including around 80 other countries within the policy’s scope (the ‘Made with Europe’ approach).

In the presentation we put forward several recommendations to amend the IAA towards a more ambitious but, above all, effective plan to tackle the ‘Chinese challenge’. The implications of these amendements for the European Union are very significant. As recently argued by Mario Draghi: "Whereas markets used to be relied on — whether right or wrong — to steer the economy, large-scale industrial policies have become the new norm. Where once the state saw its powers reduced, today all available means are mobilized in its name. Europe is ill-equipped in a world where geo-economics, security, and the stability of supply chains govern trade relations more than efficiency" ("How Do We Change Our Continent’s Trajectory?", speech, 22/08/2025).

This presentation is based on the 45th Acte of Gerpisa --> https://www.gerpisa.org/node/8771