Valeo CEO Backs EU's 80% Local Content Proposal for Cars

In a significant development, the CEO of Valeo, a prominent French automotive parts supplier, has expressed support for the European Union's proposal to set a minimum local content requirement for cars sold within the region. This move is seen as crucial for maintaining the competitiveness of the European automotive industry, which is currently grappling with the high costs of transitioning to electric vehicles, intense competition from China, and uncertainties surrounding tariff policies.

The European Commission is actively engaging with automakers and their suppliers to explore pathways that ensure the industry's future growth. A key focus for industry executives is the revision of the EU's policy to ban the sale of new petrol cars from 2035 onwards, which they believe is too short-sighted. Suppliers, on the other hand, are urging the EU to implement a minimum local content standard, proposing that 80% of the parts used in EU-manufactured cars should be sourced locally.

“Such a mechanism would enhance Europe's sovereignty while protecting the industry's competitiveness,” the CEO stated at the Munich Motor Show. He also highlighted that similar incentives have already been introduced in the United States and India. The CEO is optimistic about further discussions with the EU Commission President Ursula von der Leyen on Friday, where the proposal will be explored in more detail.

The EU Commission has previously indicated plans to gradually introduce local content requirements for battery cells and components. However, the CEO noted that there is still work to be done, as some companies, particularly in Germany, remain opposed to such requirements. The German Association of the Automotive Industry (VDA) has previously argued that the resilience of the European automotive industry should not be built on excessive regulation, categorizing local content requirements as an example of such over-regulation.