The Federal Ministry for Economic Affairs, led by Katherina Reiche (CDU), anticipates substantial cost increases across sectors including automobiles, batteries, and solar installations should the planned EU preference rules come into force. This outlook stems from an internal assessment conducted by the Department of European Industrial Policy regarding the Industrial Accelerator Act (IAA), as reported by the “Industrie und Handel” newsletter of “Politico”.
For electric vehicles specifically, the Ministry expects an increase of 630 Euros per car, attributed to the “Made in EU” requirements for batteries by the year 2030. Furthermore, vehicles constructed using low-carbon steel are projected to cost nearly 70 Euros more.
The IAA is an EU regulation designed to bolster Europe’s industry and accelerate its decarbonization efforts. It aims to specifically create demand for CO2-lean products and goods from the EU through public tenders and funding programs, particularly in industries such as steel, cement, and aluminum. The draft regulation was discussed for the first time by the Council for Competitiveness on Thursday.
Fundamentally, the German government supports the initiative. The internal paper states that the Industrial Accelerator Act is expected to strengthen the competitiveness of EU industries-in energy infrastructure, solar power, batteries, and vehicle components-by securing demand for these products while simultaneously increasing the EU’s economic security and resilience. This shift is projected to influence international trade flows, reduce dependencies, and favor foreign investment in EU sectors with higher added value.
However, the BMWK also cautions against potential adverse outcomes. Negative reactions from some trading partners could pose competition challenges for EU industries in global markets, and costs associated with public procurement are also forecasted to rise.
In contrast, the industry stands to benefit from faster and more digitized approval processes, which could result in cost savings of up to 240 million Euros. Nevertheless, the report notes that for the further-processing industry, the mechanism of “leading markets”-state-driven demand-has driven up production costs. Specific losses in gross value are projected: 291 million Euros for the automotive industry and 691 million Euros for construction, alongside a projected 0.45 percent increase in building costs.
Despite these costs, the leading markets are expected to create and retain approximately 150,000 industrial jobs. Additionally, the IAA provisions are intended to protect the climate, with the BMWK forecasting a reduction of around 30.6 tons of CO2 by 2030.
