Takeaways
- SMMT has formally called on the EU to include the UK as a trusted partner under the IAA’s ‘Made in EU’ provisions, warning that ambiguity is already affecting investment decisions ahead of the summer EU-UK summit.
- Annual EU-UK automotive trade is valued at €80 billion, and Nissan has warned its Sunderland plant employing 6,000 workers faces an ‘existential threat‘ if excluded from IAA incentives.
The Society of Motor Manufacturers and Traders (SMMT) has formally called on the European Union to include the United Kingdom as a trusted partner under the ‘Made in EU’ provisions of the proposed Industrial Accelerator Act (IAA), warning that ambiguity over the country‘s status is already affecting investment decisions. SMMT Chief Executive Mike Hawes told reporters in Brussels that the car industry needs a political commitment ahead of the EU-UK summit scheduled for summer 2026, before the IAA completes its legislative passage.
Trade Relationship at Risk
The stakes are substantial. EU-UK automotive trade is valued at approximately €80 billion (US$94 billion) annually, with each side remaining the other‘s largest passenger car market. The EU sells more automotive components to the UK than to any other global market, totalling €9.1 billion annually. The IAA, published by the European Commission on 4 March 2026, establishes ‘Made in EU’ requirements for public procurement and subsidies across strategic sectors including EVs, batteries and clean technology. An automotive-specific annex currently requires vehicle assembly within the EU, which would exclude British manufacturers.
Hawes argued the IAA’s objective was to counter Chinese competition, not to disrupt EU-UK trade. “The objective was to bolster the competitiveness of European industry vis-à-vis the increasing challenge coming from low-cost countries,” he said. “We are not a low-cost country. The intention of this regulation was not to hit the EU-UK trade”.
Sunderland Plant Faces ‘Existential Threat’
Nissan has warned that its Sunderland plant, the UK‘s largest car factory employing 6,000 workers, could face closure if excluded from IAA incentives. One industry executive told the Financial Times that Nissan being “frozen out of access to EU incentives” could pose “an existential threat”. The plant currently operates below its 600,000-unit annual capacity, and excluding UK-built EVs from fleet incentives would block access to a segment that accounts for approximately 60 percent of the EU new car market.
Political Divisions and the Path Forward
France advocates a strict EU-only interpretation, while Germany prefers a ‘Made with EU’ model that includes trusted partners. Countries with EU free trade agreements or WTO government procurement membership are expected to qualify, but the final list will only be confirmed after the Act is adopted, a process that could take at least a year.
The open question is whether Germany’s preference for a ‘Made with EU’ model that includes the UK will prevail, and whether the summer summit can secure a political statement before the IAA‘s passage. Without clarity, UK automotive investment decisions will remain frozen at the worst possible moment in the EV transition.
