The draft would require subsidized EVs to be assembled in the EU, with at least 70% of components sourced locally, excluding batteries. The threshold remains under discussion. The European Commission is set to propose that electric vehicles must contain at least 70% EU-sourced components to qualify for member state subsidies, in a move aimed at safeguarding the bloc’s manufacturing base against rising competition from Chinese automakers, the Financial Times reported. BYD EVs exported from China The proposal will form part of the Commission’s Industrial Accelerator Act, due to be formally published on Feb. 25. The 70% figure appears in brackets in the draft text, indicating it remains under discussion and subject to revision. Under the draft legislation, new battery electric, hybrid and hydrogen fuel cell vehicles eligible for government purchase incentives, or owned or leased by public authorities, must be assembled within the European Union. In value terms, at least 70% of components, excluding the battery, must originate from the EU. BYD manufacturing base in Hungary As early as 2025, the European Commission signaled it would introduce local content rules for the electric vehicle value chain, alongside selective easing of emissions regulations to cushion the auto industry’s transition pressures. The proposed threshold has sparked debate within Europe. The European Association of Automotive Suppliers (CLEPA) supports the introduction of local sourcing rules, warning that failure to act could result in the loss of up to 350,000 jobs across the region. Automakers with significant exposure to the Chinese market, including BMW and Mercedes-Benz, have cautioned that an excessively high local content requirement could trigger retaliation from China and raise production costs. Renault has expressed support in principle, though its Chief Executive Officer Francois Provost said in December that a 60% overall threshold would be more realistic. BMW manufacturing base in Munich Currently, most European automakers still rely on Chinese and South Korean suppliers for power batteries. Even where companies have established production facilities in Europe, supply chains are unlikely to be fully localized in the short term. The policy debate comes as Chinese brands expand rapidly in Europe. Dataforce data show that Chinese marques sold 70,465 vehicles in Europe in January 2026, up 80% YoY, lifting market share from 4% a year earlier to 7.4%. Over the same period, overall European new car registrations declined 3.5%. Against a backdrop of market weakness, the growth of Chinese brands has become more pronounced.