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EU's "Industrial Accelerator Act" Proposal Sparks Controversy, Posing New Challenges for China's Battery and EV Industries

【Core Event】

On March 4, 2026, the European Commission officially submitted the legislative proposal for the Industrial Accelerator Act (IAA) . This act is a core industrial strategy launched by the EU in 2026, aiming to increase manufacturing's share of EU GDP from the current 14.3% to 20% by 2035.

However, the proposal's foreign investment restrictions on strategic sectors such as batteries and electric vehicles have sparked strong opposition from industry organizations, including the China Association of Automobile Manufacturers (CAAM).

【Core Restrictions of the Proposal】

According to the draft text, for investors from third countries that hold more than 40% of global production capacity in relevant sectors, projects with an investment value exceeding €100 million would be subject to additional scrutiny. These projects must meet at least 4 out of the following 6 conditions (and must include the employment requirement):

【Sectors Covered】

The proposal explicitly targets the following four "emerging strategic sectors":

• 🔋 Battery technology and its energy storage system supply chains

• 🚗 Battery electric vehicles, hybrid vehicles, and fuel cell vehicles, including related electrification and digitalization components

• ☀️ Solar photovoltaic technology

• ⛏️ Extraction, processing, and recycling of critical raw materials

It is noteworthy that the restrictions apply specifically to investors from third countries holding more than 40% of global production capacity in these sectors. Given China's dominant global position in batteries, photovoltaics, and electric vehicles, the targeted nature of these provisions is unmistakable. Some analyses suggest these provisions are primarily directed at Chinese investors.

【Industry Reaction: CAAM Firmly Opposes】

On May 22, 2026, the China Association of Automobile Manufacturers (CAAM) issued an official statement expressing serious concern, strong dissatisfaction, and firm opposition to the EU's IAA.

The statement noted that provisions such as "foreign ownership not exceeding 49%, mandatory technology transfer, and local employee ratio not less than 50%" are "clearly intended to unreasonably restrict and suppress China's automotive industry, representing a typical form of systemic discrimination. These measures severely disrupt normal China-EU industrial cooperation and market competition order, harming the interests of Chinese automotive companies and their upstream and downstream partners."

CAAM called on the EU side to "prudently assess the impact of relevant provisions on China-EU industrial cooperation, earnestly comply with WTO rules, and avoid using protectionist measures to interfere with fair competition." The association also stated it would "resolutely safeguard the legitimate interests of the industry, continuously monitor the legislative progress of the bill, and support and assist member companies in their proactive responses."

【Impact Assessment on Chinese Battery & Energy Storage Companies】

The European market is a core region for the overseas expansion of Chinese battery and energy storage companies. Statistics show that in 2025, the total scale of overseas orders secured by Chinese energy storage companies reached nearly 284.26 GWh, with Europe ranking first with 61.82 GWh in orders. The factory layouts of CATL in Germany, Hungary, and Spain, as well as the continued expansion of leading companies like BYD and Gotion High-Tech, all underscore the importance of the European market for Chinese battery companies.

If the IAA is ultimately passed, it could have profound impacts on Chinese battery investments in Europe:

1. Increased Investment Threshold: Investments exceeding €100 million would face rigorous review procedures.

2. Restricted Control: The 49% foreign ownership cap would alter the governance structure of joint ventures.

3. Technology Transfer Pressure: Mandatory technology transfer requirements could erode companies' core technological competitiveness.

4. Rising Operating Costs: Requirements for local sourcing and R&D investment would increase operational expenses.

5. Increased Compliance Risks: Violations could result in hefty fines (not less than 5% of the company's average daily total turnover).

【Legislative Process & Future Outlook】

Currently, the IAA is still in the proposal stage and must undergo review and deliberation by the European Parliament and the Council of the European Union. It may take several months or longer for the act to be finally passed.

Although the act has not yet been enacted, the policy signal it sends is clear enough: the EU is shifting from a traditionally open investment policy toward a more protectionist industrial strategy. For Chinese battery companies considering expansion in Europe, closely monitoring the act's progress, proactively assessing compliance risks, and exploring diversified cooperation models will be essential tasks in the coming period.

As an active participant in the battery industry, we will continue to monitor the legislative developments of the IAA and provide industry partners with the latest policy interpretations and compliance suggestions.