The European Commission has proposed draft legislation requiring electric vehicles to have 70% of their components manufactured within the EU to qualify for state support. This move aims to protect and strengthen the bloc's domestic manufacturing industries amid growing competition from Chinese and American automakers. The proposal comes as the EU seeks to reduce dependence on foreign supply chains.

Under the new rules, automakers would need to demonstrate that the majority of their vehicles' value is created within EU borders to access government incentives and subsidies. This threshold would apply to both battery production and vehicle assembly, potentially reshaping investment strategies for major manufacturers. The legislation reflects broader efforts to maintain European industrial competitiveness in the rapidly evolving EV market.

The proposed regulations could significantly impact how global automakers structure their European operations. Companies may need to relocate production facilities or form new partnerships with local suppliers to meet the requirements. While designed to boost domestic manufacturing, the rules could also increase costs for consumers and potentially slow EV adoption rates across the region.