EU Industrial Accelerator Act: Market Access Meets Industrial Policy

Why should I read this?

The EU is conditioning access to certain strategic industrial sectors. The Industrial Accelerator Act (IAA), proposed by the Commission on 4 March 2026, introduces three sets of new rules. Its headline goal is to raise manufacturing’s share of EU GDP from 14.3% to 20% by 2035. The rules would affect how businesses invest, manufacture, and sell to the public sector in the EU.

First, certain non-EU investments in batteries, electric vehicles, solar panels, and critical raw materials would require prior approval if certain thresholds are met. Second, new "Made in EU" content requirements would apply to public procurement and public support schemes. Third, low-carbon criteria would apply to public tenders for energy-intensive products such as steel, cement and aluminium.

The IAA sits alongside three existing regimes affecting M&A in the EU: the FDI Screening Regulation, the Foreign Subsidies Regulation, and EU merger control. For non-EU investors, this creates a fourth layer of regulatory scrutiny. The Proposal is now before Parliament and Council. It is controversial and may change substantially during negotiations.

What would change?

The IAA is a proposal, so no obligations apply yet. If adopted, it would change who can invest in the sectors concerned, what the public sector buys, and how projects are permitted.

For non-EU investors in batteries, electric vehicles, solar panels, or critical raw materials, the following applies:

• Three cumulative filing triggers. A filing is triggered when three conditions are met: (i) the investment exceeds €100 million, (ii) the investor's home country holds over 40% of global capacity in the sector, and (iii) the investor acquires 30% or more of the target.
• Conditions on approved investments. At least four of six value-added conditions must be satisfied, including a mandatory 50% EU workforce ratio, a 49% ownership cap, EU partner participation, IP licensing, R&D commitments, and 30% EU-sourced inputs. These conditions could affect deal structuring and viability.
• Parallel filing obligations. Clearance may also be required under national FDI screening, national or EU merger control, and the Foreign Subsidies Regulation.
• Exemptions. Investments covered by EU free trade agreements, passive portfolio investments and service-only investments are excluded.

For manufacturers and suppliers in energy-intensive industries, automotive and net-zero technologies, the following applies:

• EU content and low-carbon requirements. The IAA introduces minimum EU-origin and low-carbon thresholds for public procurement and public support schemes in steel, cement, aluminium, automotive, and net-zero technologies.The products covered are listed in Annexes II and III of the Proposal.
• Supply chain documentation. The IAA would require businesses to provide verifiable data on product origin and carbon intensity when bidding for public contracts or accessing public support. If adopted in its current form, this would require data that many businesses do not yet collect systematically.
• Available derogations. Exemptions exist where there is a sole supplier, or where compliant products cost more than 25% above the cheapest available alternative.
• Accelerated permitting. The IAA would create a single access point and a single application covering all permits for industrial manufacturing projects. Authorities would have 45 days to confirm the application is complete or request the missing information. It would also extend the Net-Zero Industry Act's maximum permitting timelines to energy-intensive decarbonisation projects.

What else do I need to know?

A new type of FDI screening

The IAA is structurally different from traditional FDI screening, which focuses on national security. It targets economic security and industrial independence. The question is not whether an investment poses a threat, but whether it delivers enough value to the EU. That makes it closer to a tool aiming to reduce supply-chain dependency than a broader investment-screening regime.

If the three triggers are met, the investor would have to notify the national investment authority. The investment cannot proceed without approval. That authority forwards the notification to the Commission, which may issue an opinion or take over the assessment. Takeover applies to investments exceeding €1 billion, those with cross-border effects,
or at a Member State’s request. National authorities cannot waive the conditions. Failure to notify or comply could result in financial penalties.

Country-neutral rules, targeted reach

The IAA's scope is formally country-neutral, but its reach is not. The rules only apply where the investor's home country holds over 40% of global manufacturing capacity in the relevant sector. In practice, this captures investors from countries dominant in batteries, EVs, solar panels, and critical raw materials. For those investors, the consequences are significant. Approval decisions take 60 to 75 days, extendable. This means that deal timelines would lengthen, and deal structures would need to be designed around the value-added conditions from the outset.

The Commission can expand the covered sectors by delegated act. Digital technologies, AI, quantum, and semiconductors are excluded for now. Businesses in adjacent sectors should monitor any expansion closely.

"Made in EU" as a market access condition

EU origin becomes a binding requirement for certain public tenders, auctions, and support schemes. For steel, the Proposal introduces low-carbon requirements. For cement and aluminium, both “Made in EU” and low-carbon requirements apply. For net-zero technologies, “Made in EU” rules cover batteries, energy storage, solar PV, heat pumps, wind, electrolysers, and nuclear. Electric vehicles are subject to separate provisions. The thresholds vary by sector and product category. Content from EU free trade partners counts as EU-origin. However, the Commission can revoke this status for individual countries by delegated act. Grounds include lack of equivalent market access for EU companies or supply security risks.

What happens next?

The IAA must be adopted by both Parliament and Council before it enters into force. Neither has taken a formal position yet. Early signals suggest diverging views among Member States on key issues. These include the scope of "Made in EU" preferences and the treatment of trusted trade partners. Other open points are the extent of FDI conditionality and the Commission's role in the screening process. These divisions will shape the final text.

EU leaders have called for agreement by the end of 2026. In practice, formal adoption in mid to late 2027 is the more likely outcome. If adopted, the IAA would not take effect all at once. Member States would have one month from entry into force to designate Investment Authorities. The permitting provisions would follow a year later. For energy-intensive industries, the procurement rules apply only to tenders launched on or after 1 January 2029. That date holds whenever the IAA is adopted, so later adoption leaves less time to prepare.

The IAA’s core architecture, including FDI conditions, “Made in EU” preferences, accelerated permitting, is expected to survive the legislative process. The scope, thresholds, and third-country access rules are where changes are most likely. For now, the practical step is to scope potential exposure and decide whether to engage. The text is still open, but the room to shape it narrows as negotiations advance.

Further reading

• Global Sustainability & ESG Insights - June 2026
• EU adopts renewed foreign investment framework
• EU Tightens Control Over Critical Raw Materials
• Executive Compliance Guide: Critical Raw Materials Act & Updates