On March 4, 2026, the European Commission unveiled the Industrial Accelerator Act (IAA), a cornerstone of the “Clean Industrial Deal” aimed at reclaiming Europe’s manufacturing prowess. The Act sets a bold target to increase manufacturing’s share of EU GDP to 20% by 2035.
To achieve this, it introduces strict “Union origin” (Made in EU) and low-carbon requirements for public procurement and subsidy schemes. For the automotive and heavy machinery sectors, the Act is particularly transformative: starting in 2029, public tenders for electric vehicles (EVs) will require that at least 70% of the vehicle’s non-battery value originates from within the EU, with final assembly and significant battery production also taking place on European soil.
Additionally, the Act creates “Industrial Acceleration Areas” to provide a digital “one-stop-shop” for permitting, drastically reducing the bureaucratic delays that have historically hampered the expansion of European factory sites.
Source: EU Commission Report Read The Report
Industry Implications. This legislation creates a “protected lead market” that directly shields listed companies—such as Volvo AB, Traton, and Iveco—from low-cost global competition. By tying public funds to European origin, the EU is effectively subsidizing demand for local manufacturers. However, this “Buy European” pivot forces a massive supply chain recalibration. Companies must now ensure that their tier-one and tier-two suppliers for steel, aluminum, and electronics are also EU-based to meet the 70% threshold.
For the agricultural and construction sectors, this could lead to higher equipment costs in the short term as manufacturers move away from cheaper global inputs. Long-term, however, it incentivizes a “Giga-factory” style scaling of the entire industrial value chain within Europe. The Act also places high bars on Foreign Direct Investment (FDI), ensuring that any non-EU entrants must provide genuine “value-add” through technology transfer and local employment. PSR
Emiliano Marzoli is Manager of European Operations for Power Systems Research
