Europe’s Automotive Moment: From “Made in Europe” to “Made with Europe”

As Brussels advances the Industrial Accelerator Act (IAA) and Europe’s automotive sector enters a defining chapter, a deceptively simple question is shaping the strategic debate: should the future of European mobility be “Made in Europe” or “Made with Europe?” The answer will determine not only the competitiveness of the continent’s flagship industry, but also the credibility of its broader industrial policy ambitions. 

A New Competitive Reality, Honestly Assessed 

The data tells a story that deserves to be read without ideology. Chinese automotive original equipment manufacturers’ (OEM) market share in Europe has more than doubled in the past 12 months to roughly 6.8% and continues to climb. What is most instructive, however, is how this share has been won. It has not been driven primarily by price, but instead by substance: better features, higher quality and stronger perceived value, with many Chinese players pricing within the market rather than undercutting it. 

This is a meaningful distinction. It reflects years of hyper-competition in China’s domestic market, where auto industry margins plummeted to 4.1% in early 2026, forcing rapid iteration, cost discipline at scale and full-stack ecosystem integration across batteries, software and supply chains. Emerging from what might fairly be described as “the world’s toughest gym,” Chinese OEMs are bringing genuine capabilities to the global stage. Recognizing this is not a concession; it is the starting point for any serious European strategy. 

European OEMs, meanwhile, are not in retreat,—they are repositioning, rationally prioritizing profitability, cash flow and cost discipline over a direct volume fight with new entrants. With European demand still below pre-COVID levels and structural constraints around labor and small-car mix persisting, this is a defensible commercial posture. The competitive battlefield has simply shifted from price to capability, system integration and speed at scale. 

The Real Question Behind the Industrial Accelerator Act 

The Industrial Accelerator Act arrives at exactly the right moment, but only if it is built on the right premise. The real question for Europe is not how to stop Chinese competition. That framing is both unrealistic, China itself cannot stop it and strategically limiting. The more productive question is how Europe uses its industrial, regulatory and financial resources most effectively to build durable capabilities and do so quickly. 

This reframing leads to a counterintuitive but important insight: market share may not be the near-term goal. The longer-term prize is homegrown capability, even if it requires temporary market trade-offs, precisely the playbook China itself ran in developing its auto sector. 

It also leads directly to the “Made in Europe” versus “Made with Europe” choice. A purely “Made in Europe” reflex risks treating localization by new entrants as a threat to be deflected. A “Made with Europe” approach treats it as an opportunity to strengthen Europe’s industrial base, deepen technology exchange and accelerate the deployment of underutilized capacity. The evidence increasingly suggests that the second framing is more strategically robust. Early data shows that trade defense measures have had limited impact on Chinese OEM expansion strategies, while partnership-led models offer Europe both industrial depth and faster access to capabilities at the technology frontier. 

Where the Industrial Accelerator Act Can Move the Needle 

If the Act is to live up to its name, it must close the gap between strategic intent and industrial execution speed. That means treating Europe’s underutilized production capacity as a strategic asset rather than a liability, with new partnerships, including new entrants, converting idle assets into industrial momentum, jobs and two-way technology transfer. It means regulatory frameworks that enable rapid technology pivots, particularly on cost drivers like battery chemistry choices between LFP and NCM, rather than constraining them. And it means treating talent as a strategic asset: manufacturing ambition without sectoral engineering depth is unsustainable, and incubating, sourcing and attracting talent deserves the same urgency as capital deployment. 

Incentive design matters equally. With roughly 60% of the European market driven by fleet buyers, incentives anchored to total cost of ownership and residual values will outperform those focused on upfront consumer prices. Perhaps most importantly, Europe faces a methodological choice that will define the Act’s effectiveness: pursue a comprehensive legislative package that moves slowly amid sustained controversy or launch smaller, industry-beneficial initiatives that move quickly and compound over time. The Industrial Accelerator Act will ultimately be judged on which logic it follows. 

“Made with Europe” As A Strategic Posture 

The most constructive reading of the current moment is that Chinese OEMs are not simply challengers; they may also bring enabling capabilities that benefit the wider industry alongside Europe’s established players. European OEMs are not collapsing; they are repositioning for a more demanding, capability-led competition. Both can be true; both should inform policy. 

Removing the strongest players from the field rarely makes the remaining players stronger. With more than 50 auto OEMs and over 120 brands competing in China, and Chinese players now scaling into global markets including the Global South, competition will only intensify. Europe’s task is to adapt faster, and to deploy its genuine strengths, regulatory sophistication, deep engineering heritage and unmatched market scale, in a more coordinated way. 

A “Made with Europe” posture is not a softening of European ambition. It is a sharpening of it. It accepts that the most competitive industrial systems of the next decade will be those that combine the best of local capability with the best of global partnership, anchored in European standards, European workforces and European strategic autonomy. 

Building the Un/Common Ground 

Consensus has arrived on the need for an antidote to boost European competitiveness. Consensus on what that antidote actually looks like has not. Closing that gap is the defining task of the months ahead, and it will not be closed in conference rooms alone. It will require more intensive, more honest exchange between market frontliners, policymakers, business leaders and strategy designers, the actors who together can translate ambition into industrial reality. 

That is the spirit in which the Industrial Accelerator Act should be shaped: less as a defensive perimeter, more as a platform for coordinated action. Less about what Europe builds against the world, more about what Europe builds with it. The OEMs, suppliers, investors and policymakers who recognize this shift, and act on it early, will define the next decade of European mobility. 

APCO advises leading automotive manufacturers, suppliers and investors on regulatory strategy, market positioning and stakeholder engagement across Europe, China and global markets.