SMMT Calls on the EU to Keep Key EV Incentives for Fleets

The UK’s Society of Motor Trade Manufacturers and Traders (SMMT) has called on the EU to amend its proposed Industrial Accelerator Act (IAA) to keep the UK automotive sector as a Made in Europe partner. 

It has asked for clarity from the EU as to whether the UK would be subject to the regulation, with the trade association arguing that excluding the UK from the Made in Europe policy would inflict significant harm to UK and EU manufacturing capability. 

The incentives the UK could be excluded from provide financial support for companies adopting EV fleets.

Understanding the industrial accelerator

The Industrial Accelerator Act is a framework proposed by the European Commission to accelerate industrial investment and decarbonisation in strategic sectors. These include automotive, steel, cement and aluminium.

The framework rests on three main pillars: Faster permitting for industrial projects, creating lead markets for clean industrial projects and strengthening investment in strategic sectors.

A Made in Europe initiative in public procurement forms part of the framework. This initiative could see the UK excluded from incentives offered to EU based manufacturers.

The Made in Europe regulation could exclude the UK from incentives offered to EU manufacturers in its current draft. These incentives connect to the electrification of corporate fleets, which account for around 60% of the EU new car market according to data from the European Commission.

Impact on EV access

The incentives provide financial support for companies adopting low carbon and zero emission vehicle fleets. They also support manufacturers' ability to sell in EU markets.

According to the SMMT, preventing UK access to these incentives would put the sector at a disadvantage. This could impact production volumes and constrain EU supply chains.

Mike Hawes, SMMT Chief Executive, says: "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."

Mike adds: "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 to jobs, investment and innovation."

EU and UK trade relationship

The value of EU EV imports to the UK has increased tenfold since 2019. According to data from the SMMT, almost two thirds of battery electric vehicles sold in the UK are imported from EU plants at 61.6%.

The EU-UK automotive partnership is valued at €80bn (US$83.6bn) annually. According to the SMMT, the UK remains the EU's largest export market for passenger cars and vice versa, which is worth an annual €39.7bn (US$41.5bn) to EU based manufacturers.

The EU sells €9.1bn (US$9.5bn) worth of typical automotive components to the UK automotive sector every year. According to UN data from 2024, this is worth more than to any other global market.

Both the UK and wider Europe face competition from Chinese EVs that are rapidly gaining market share. These vehicles are produced more quickly and sold at cheaper prices.

Mike says: "The EU and UK automotive sectors are highly integrated and a closer relationship is now compelled by the increasing uncertainties in the global environment. Instead of weakening our partnership, we must seize the opportunity to deepen collaboration and unlock the full promise of the TCA, ensuring the successful transformation of a globally competitive automotive industry."