The European Commission’s proposed Industrial Accelerator Act (IAA) marks a significant shift toward a more interventionist industrial policy. This Brief examines the IAA mechanisms intended to reduce Europe’s dependence on China in the battery and electric vehicle (EV) sectors (the IAA’s coverage of sectors such as cement and steel is not addressed). Although the objective of strengthening Europe’s industrial base is understandable, the proposed measures are unlikely to achieve that objective. Origin requirements and foreign investment screening are weakened by broad exemptions for free-trade partners, while thresholds based on price differentials between European and Chinese production are too low to incentivize private investment in Europe. By underestimating the scale of China’s competitive advantages and paying insufficient attention to global market conditions, the IAA risks raising prices within the EU without delivering meaningful strategic gains.
