UK-built cars could miss out on EU grants thanks to new 'Made in Europe' legislation
Under current plans, UK-built cars won’t receive EU government grants and company car tax incentives
The UK’s car industry has called on the EU to reconsider its plans to introduce new legislation that would effectively exclude British-built cars, parts and EV batteries from receiving the same incentives as those produced in mainland Europe.
Under the EU’s proposed Industrial Accelerator Act (IAA), cars and car parts that are considered to be ‘made in Europe’ will receive several benefits such as qualification for state-backed grants, company car tax incentives and additional CO2 credits for small cars less than 4.2 metres long. Such changes are designed to act as a means of bolstering European industry and levelling the playing field against the raft of cheaper models arriving from China.
However, as it stands cars manufactured within the UK will not qualify for these incentives under the current agreements. With this in mind, industry officials fear that this could weaken the roughly £70billion trade partnership between Britain and the EU, with the forfeiture of company car incentives being of particular concern given corporate fleets account for roughly 60 per cent of Europe's new-car market.
Chief executive of the UK’s Society of Motor Manufacturers and Traders, Mike Hawes, called for this to change. “Brexit put the resilience of our shared industry under enormous stress but manufacturers have overcome those challenges to grow our trade in electrified vehicles alone to record levels,” he said.
“If the Industrial Accelerator Act proceeds as drafted, it threatens to reverse progress, undermining the Trade and Cooperation Agreement all sides worked so hard to deliver and jeopardise our respective competitiveness, damaging jobs, investment and innovation.”
For context, in 2025 57 per cent of cars built in the UK were exported to the EU, with the vast majority being internal combustion-engined models. However, with the new all-electric Nissan Leaf having just entered production at Sunderland, and this soon to be followed by the new Nissan Juke EV, securing vital electric car incentives for the EU market will be paramount to the UK automotive manufacturing industry’s future success.
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