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Korean battery makers buzz as 'Made in Europe' policy set to restrict China

Published: 05 Mar. 2026, 19:18

New cars, among them new China-built EVs of BYD, are seen parked in the port of Zeebrugge, Belgium, on Oct. 24, 2024. [REUTERS/YONHAP]

Korean battery makers are in high spirits as the European Union's latest industrial policy, aimed at prioritizing "Made in Europe" in a shift away from China, could benefit Korean companies in the so-called green industries such as EVs and batteries.

The European Commission announced the final version of the Industrial Accelerator Act (IAA) on Wednesday.

Under the proposal, products must meet specific production requirements within the EU to qualify as “EU-made.” For example, at least 70 percent of EV components must be assembled within the EU to receive subsidies and other support.

The policy carries similarities to the Inflation Reduction Act (IRA) introduced by the United States to strengthen domestic clean energy industries in response to China’s growing influence.

The proposal stems from the "Draghi Report" by former European Central Bank president Mario Draghi. The plan aims to increase the share of manufacturing in the EU’s GDP from 14 percent to 20 percent while reducing heavy reliance on China.

Korea’s automobile and battery industries are closely monitoring the proposal. A key question concerns how broadly the EU will define products as EU-made. The final draft allows countries that have FTAs with the EU, such as Korea, to qualify under origin rules.

The body and chassis of a Ford pre-production all-electric F-150 Lightning truck prototype are seen at the Rouge Electric Vehicle Center in Dearborn, Michigan, on Sept. 16, 2021. [REUTERS/YONHAP]

However, the proposal also requires a certain level of production within the EU, so companies are paying attention to changes to the legislation.

“Countries with FTAs will qualify under EU-origin rules, but the proposal still includes local production requirements,” a Korea International Trade Association (KITA) official said. “That means products made in Korea will not automatically qualify as EU-made. Each industry needs careful analysis."

China, which does not have an FTA with the EU, will likely face greater difficulties.

The proposal also includes provisions widely viewed as targeting China. Companies from countries that hold more than 40 percent of the global market share in a specific industry must undergo strict approval procedures before investing in Europe. China remains the only country exceeding 40 percent global market share in both the EV and battery sectors.

Industry observers say the measure effectively creates another barrier designed to prevent Chinese companies from bypassing restrictions simply by building production facilities in Europe.

An automated lithium-ion battery production line operates at a workshop of Zhejiang Shineway Technology in Yongkang, China, on Nov. 11, 2025. [REUTERS/YONHAP]

Analysts say the policy could especially create new opportunities for Korean battery makers. Korean companies controlled nearly 80 percent of the European battery market in 2022, but an influx of low-cost Chinese batteries has since reduced that share to the 30 percent range.

Industry experts say Korean manufacturers could regain market share if European automakers adjust their battery supply chains under the new policy.

Major Korean battery makers LG Energy Solution, Samsung SDI and SK On already operate production facilities in Europe, which could make it easier for them to meet local production requirements.

The outlook for the automobile industry, on the other hand, remains uncertain.

Vehicles move on the line at the Hyundai Motor Group Metaplant America in Ellabell, Georgia, on March 26, 2025. [AP/YONHAP]

Hyundai Motor Group operates factories in the Czech Republic and Slovakia, but its production capacity remains limited. The company currently produces key EV models such as the Ioniq 5 and EV6 in Korea and exports them to Europe.

If the proposal passes in its current form, Hyundai Motor Group may need to increase investment in European production to meet the local manufacturing requirements.

Industry observers say the policy could still change during the legislative process because EU member countries hold differing views. France and Italy strongly support the proposal, while Germany strongly opposes it, because German automakers such as Mercedes-Benz and BMW rely heavily on the Chinese market and could face retaliation if China responds with countermeasures.

“Korea provides subsidies regardless of where EVs are produced,” a KITA official said. “If the EU requires local production, that could conflict with the principle of reciprocity. We plan to continue raising the issue.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY NAM YOON-SEO [[email protected]]