Made in Europe. Local content policy for the European automotive industry

Mots-clés:

Résumé:

China has become the main global exporter of light vehicles, of intermediate and semi-finished goods for Electric Vehicles, of tires, brakes and their respective parts, the second exporter of engine parts behind Germany and the third exporter of body panel parts behind Germany and Mexico. Without “strong defensive action from traditional auto hubs”, supply chains for both ICE and EV parts will further concentrate in China [1]. Europe is currently the most exposed region to this risk [2].

The tariffs for auto parts imported from China to Europe are set between 3% and 4,5% depending on the type of products, and at 1,3% for lithium-ion batteries by comparison with 18% to 45% for Battery Electric Vehicles. Imports of auto parts from China have been constantly rising during the last ten years and already represented in 2024 one auto part out of four imported to Europe. So far no action has been taken by the European Commission to address this risk [3]. Since 75-80% of the value of vehicles manufactured in Europe come from car-part suppliers [4], this represents a major threat to the whole European automotive ecosystem.

A letter addressed ahead of the Strategic Dialogue on the Future of the European Automotive Industry by a consortium of French and Italian equipment manufacturers and their professional associations has demanded the introduction of local content requirements and incentives to fulfil this regulatory void and preserve the resilience of the European automotive supply chain against unfair Chinese competition.

The Industrial Action Plan for the European automotive sector announced on the 5^th of March highlights the need to strengthen the “trade defence” toolbox and “to investigate unfair practices further up the supply chain, including in the batteries and parts segment when necessary” [5]. However, there are no references to local content requirements or incentives, at least for the auto parts’ sector.

Against this background, the present reports focuses on two questions:

• Why is it necessary to implement now a comprehensive local content policy (LCP) for the automotive sector?
• What type of policy mix should Europe implement to introduce rapidly and efficiently local content requirements for automotive production?