The European Union could impose a 'Made in Europe' rule for electric vehicle cars that requires at least 70 per cent of an EV's components to be produced in EU countries to stem the overwhelming competition arriving from China.

Manufacturers will need to meet these requirements in order to qualify for public subsidies, public procurement, and leasing schemes.

The Financial Times reports the EU Commission is drafting the rules to apply to all-electric, hybrid and hydrogen fuel cell vehicles.

The order will be part of the commission's Industrial Accelerator, which is due to be published in a matter of days (25 February). 

The move would not only prevent Chinese car makers from benefitting from billions of pounds of European support but would also change supply chains across Europe.

And it might not only be applicable to electrified vehicles. The legislation will extend beyond the automotive sector to cover construction and the heavy industry as well.

What does the 70% benchmark entail?

The European association of automotive suppliers, CLEPA, has set the level, dubbed a 'Made in Europe' threshold that car makers will need to comply.

Brussels wants at least 70 per cent of non-battery components to be manufactured in the EU, measured by value.

Further to this, several key battery components will need to originate from the European Union too. 

The 70 per cent threshold is currently listed in square brackets in the draft legislation, meaning it could be revised before coming into force.

Why the 70% level? 

The European association of automotive suppliers, CLEPA, has advised the 70 per cent figure.

The Made in Europe threshold represents 70 to 75 per cent of a vehicle's total component value.

Europe retains 85 to 90 per cent of the value of each combustion engine car produced and sold in the EU. 

But this drops to 70 to 75 per cent for electric vehicles because batteries make up around 30 per cent of an EV's total value but are largely sourced and produced in China.

The United States-Mexico-Canada Agreement is similar as it sets regional value content rules for passenger cars and sub-thresholds for engine, transmission and battery critical components.

Are car makers pro or anti the Made in Europe rule?

Car makers are split on the proposed legislation, while clean tech sectors are generally supportive.

BMW - a regular top four European car producer and the car brand with the highest-volume vehicle plant in 2025 - has warned against the rules as they would bring additional layers of bureaucracy and unnecessary expense.

On the other hand, VW and Stellantis actively called for the 'made in Europe' legislation last month, to incentivise manufacturers to use local content in their vehicles. 

Somewhere in between are car makers that wish for the Made in Europe content rule to be broadened out to include Turkey and the UK, and even trading partners including Japan, instead of just mainland Europe. 

The threat of Chinese competition to European brands

Unless Europe acts soon it risks subsiding automotive manufacturing outside of the bloc. 

Already, many European car makers use Chinese battery tech and materials in their new vehicles. Many are even owned by Chinese car giants or have cars manufactured there. 

This is Money recently revealed 10 cars from European and US brands you might not know are made in China, highlighting how drivers think they're behind the wheel of a European car but in fact the car is made in the East Asian nation.

China's global automotive dominance is news no to no-one, with Chinese exports surging.

Chinese automakers built nearly one in 10 passenger cars sold in Europe in December, a record level which topped off a year of huge sales of Chinese hybrid and all-electric cars.

Bloomberg analysis found that Chinese brands accounted for 16 per cent of Europe’s electrified car market in December, and 11 per cent for all of 2025 - more than doubling from 2024.

Europe's automaking sector that provides more than seven per cent of the EU’s GDP and 6.1 per cent of jobs, according to McKinsey & Co.

Chinese car makers also outsold Korean rivals in western Europe for the first time in September of last year.

This is despite the EU's 17 to 38 per cent tariffs on new electric cars.