Finance
'Made in EU' proposal poses danger to UK auto industry, car lobby CEO says
Published by Global Banking & Finance Review®
Posted on March 12, 2026
2 min readLast updated: March 12, 2026
Quick Summary
The European Commission's proposed 'Made in EU' local-content rules—for corporate fleets requiring up to 70 % of non‑battery parts to be EU‑made—threaten UK car exports and fleet sales, while the UK’s ambitious ZEV mandate adds pressure amid concerns over sustainability of EV subsidies.
EU Local Content Proposal Threatens UK Auto Industry and Fleet Sales Access
Impact of EU 'Made in EU' Proposal on UK Automotive Sector
By Nick Carey
EU Local Content Requirements and Fleet Sales
LONDON, March 12 (Reuters) - The European Commission's 'Made in EU' proposal setting local content requirements for electric vehicles poses a "clear and present danger" to Britain's car industry as it would cut off access to crucial fleet sales in the EU, the head of the UK's car lobby said on Thursday.
The Commission's proposal as it is currently written would exclude British-made cars from corporate fleets, which make up more than 60% of the European Union's new car sales, Mike Hawes, CEO of the Society of Motor Manufacturers and Traders (SMMT) said.
Significance of EU Market for UK Car Exports
Around 60% of Britain's car production is exported to the EU, which means that "manufacturers' relationship with Europe is critical", Hawes told reporters.
Concerns Over Drafting and Clarity of the Proposal
Hawes said the Commission's proposal was "very poorly drafted" and the SMMT was "making every endeavor to get clarity" as to whether the EU really intends to shut British-made cars out of Europe's corporate fleet market.
UK Government's Zero Emission Vehicle (ZEV) Mandate
The SMMT also called on Thursday for a review of the British government's 'zero emission vehicle' (ZEV) mandate that requires automakers to hit EV sales targets or face fines.
EV Sales Targets and Future Bans
EVs have to make up 33% of automakers' new car sales in 2026 and that rises to 80% in 2030. The British government's mandate will ban fossil-fuel cars as of 2035 while the EU has backed off from a similar plan.
Challenges in EV Adoption
A lack of affordable models has been a significant hurdle to more rapid EV adoption and Hawes said automakers have already spent up to 10 billion pounds ($13 billion) on discounts to sell electric cars.
Industry Perspectives on ZEV Mandate
"If you do the maths, it's just unsustainable," said Nicole Melillo Shaw, UK managing director for Volvo Car.
But Fiona Howarth, founder of Octopus Electric Vehicles, which leases EVs to British consumers and businesses, said "ZEV mandate provides the certainty that brings more choice and better value to drivers".
"Weakening this policy now would be the wrong approach," she said.
($1 = 0.7469 pounds)
(Reporting By Nick Carey; Editing by Emelia Sithole-Matarise)
Key Takeaways
- •The EU’s Industrial Accelerator Act would impose a 70 % EU‑made parts threshold (excluding batteries) and tighten battery and aluminium requirements by 2030, risking exclusion of UK‑made EVs from corporate fleets, which account for ~60 % of EU new car sales.
- •UK exports of cars to the EU—around 60 % of UK production—are at serious risk if the local‑content rule excludes non‑EEA sources; the UK and EU had already delayed stricter origin rules until 2027 to ease trade friction.
- •The UK’s ZEV mandate, demanding 33 % EV sales in 2026 rising to 80 % in 2030 and a 2035 ICE ban, is straining industry economics—manufacturers have spent billions on discounts, deemed ‘unsustainable’—even as policymakers resist weakening the targets.
Frequently Asked Questions about 'Made in EU' proposal poses danger to UK auto industry, car lobby CEO says
1What is the 'Made in EU' proposal?
The European Commission's 'Made in EU' proposal sets local content requirements for electric vehicles, impacting which cars can be sold in EU corporate fleets.
2Why is the UK auto industry concerned about the proposal?
UK car makers fear being excluded from EU corporate fleet sales, which account for over 60% of new car sales in the EU and are critical for UK exports.
3How much of the UK's car production is exported to the EU?
Around 60% of Britain's car production is exported to the EU.
4What is the UK's zero emission vehicle (ZEV) mandate?
The UK's ZEV mandate requires automakers to increase EV sales targets, reaching 33% by 2026 and 80% by 2030, with a ban on fossil-fuel cars by 2035.
5What are the challenges facing the UK electric vehicle market?
A lack of affordable models and high discount costs for EVs are major hurdles for rapid adoption, with automakers spending up to £10 billion on incentives.