The European Commission unveiled a significant industrial policy proposal on Wednesday, March 4, 2026, that could reshape manufacturing across the bloc. The proposed 'Made in EU' rules would tie access to public subsidies and government procurement contracts directly to stringent local-content and low-carbon standards. This initiative, part of a broader Industrial Accelerator Act, is designed to bolster European supply chains, particularly in strategic sectors like electric vehicles, steel, and aluminum, while countering competition from lower-cost imports, notably from China.
Ford's Supply Chain in the Crosshairs
The proposal places Ford Motor Company in a precarious position. The American automaker has highlighted its heavy reliance on supply chains based in the United Kingdom and Turkey for its European operations. Under the current draft, these nations could be excluded from the definition of 'European' content, depending on final negotiations. Jim Baumbick, Ford's European president, has warned that excluding these key partners would ultimately weaken production within the European Union itself, complicating the company's ongoing and costly transition to electric vehicles.
Strict Thresholds and Definitions
The draft legislation outlines specific thresholds that industries must meet. For electric vehicles purchased through public procurement, the rules would mandate final assembly within the EU and require that at least 70% of the vehicle's components—excluding the battery—be sourced from Europe. These requirements would take effect just six months after the law is enacted. The definition of 'Europe' is critically important; it currently includes all 27 EU member states plus Iceland, Liechtenstein, and Norway. The Commission may grant 'trusted partner' status to other non-EU countries, but only if they offer reciprocal market access, a point of contention for the UK post-Brexit.
The automotive sector, with its globally intertwined supply chains, would be disproportionately affected. Analysis by teardown specialist A2MAC1 indicates that Volkswagen's ID.3, assembled in the EU, already meets the proposed local-content rules based on parts value. In contrast, Renault's upcoming Renault 5 model is reportedly far more reliant on components linked to China, unless its battery is excluded from the calculation.
Political and Industry Pushback
The proposal is far from finalized and must secure approval from both the European Parliament and EU member state governments, a process expected to reignite familiar political divisions. France has historically advocated for stricter protectionist limits, while Germany favors broader participation that could include the UK to safeguard its auto industry. The plan also faces vigorous opposition from automakers, industry associations, and international trade partners concerned about protectionism.
During industry discussions, Christophe Perillat, CEO of French supplier Valeo, issued a stark warning that without careful intervention, the rules could trigger 'massive relocations' of production. Karoline Kampermann from the German auto industry association VDA cautioned that any moves perceived as protectionist risk sparking a damaging international backlash.
Parallel Challenge on Green Steel
A related and complex challenge involves materials, specifically steel. The Commission's draft maintains a requirement that at least 25% of steel used in public procurement must be low-carbon. However, a proposed steel emissions label was reportedly removed from the package due to internal concerns about bureaucratic overlap. This steel mandate is seeping into auto regulations, as separate EU proposals would require carmakers to source low-carbon steel to meet 2035 climate goals. Industry groups have expressed frustration, noting that 'green steel' projects are behind schedule and battling cost spikes from expensive green hydrogen, forcing reliance on factors outside their direct control.
Ford is not alone in its scrutiny of the proposal. Other automakers with substantial non-EU operations, such as Jaguar Land Rover, are also closely monitoring the 'Made in Europe' criteria. The push comes as Chinese EV brands accelerate their expansion into the European market, putting pressure on legacy manufacturers to protect their profit margins while managing a complex regulatory shift.
The coming months will be crucial as the EU clarifies the exact definitions and timelines for the 'Made in EU' criteria. The final outcome will determine whether the policy successfully onshores more manufacturing to Europe or inadvertently drives up costs and provokes retaliatory trade measures from other economic blocs.
