According to finance.biggo.com, the European Union is advancing legislation that would require more than 70% of electric vehicle components — excluding batteries — to be sourced within the bloc, posing a significant supply chain localization challenge for Korea’s Hyundai Motor Group.
Industrial Acceleration Act and Implementation Timeline
The proposed Industrial Acceleration Act (IAA), reported by Nikkei and other foreign media on September 29, mandates both final assembly within the EU and the 70% local sourcing threshold. Vehicles failing to comply could lose access to purchase subsidies, public procurement contracts, public auctions, and corporate fleet incentives. The EU aims to finalize the proposal in December, with implementation targeted as early as 2028.
The legislation emerges amid intensifying competition from Chinese automakers. According to the European Automobile Manufacturers’ Association (ACEA), the combined market share of Volkswagen Group, Stellantis Group, and Renault Group fell to 49.8% in the January–August period this year — down 2.2 percentage points from 52.0% in the same period last year — marking the first time their collective share has dropped below 50% since Stellantis’ formation.
In contrast, Chinese automakers’ combined European market share rose 4.1 percentage points, from 7.1% to 11.2%. BYD’s European sales surged 144.1%, from 95,898 units to 234,099 units, while Chery Automobile’s sales jumped 279.7%, from 54,742 units to 207,871 units. Leapmotor’s sales increased 449.9%.
Hyundai Motor Group’s European Production Capacity
Hyundai Motor Group’s existing Central European footprint offers relative resilience against the assembly requirement. Its Nosovice plant in the Czech Republic has an annual production capacity of approximately 350,000 units, while Kia’s Zilina plant in Slovakia produced roughly 300,000 units last year — yielding a combined regional capacity of about 700,000 units.
Industry observers note the group produces approximately 45% of vehicles subject to EU regulations locally. In August, electrified models accounted for 39.3% of shipments from Kia’s Zilina plant — up sharply from 11.2% a year earlier — while Hyundai’s Czech plant filled roughly half its August shipments with models including the Kona Electric and Tucson Hybrid. Hyundai Mobis operates a battery system assembly (BSA) facility at the Czech site.
Despite these strengths, Hyundai and Kia saw their combined European market share dip to 7.5% in January–August, down 0.6 percentage points from 8.1% a year earlier. While Kia sold 377,078 units — up 9.0% year-on-year — Hyundai’s sales fell 12.6% to 309,174 units.
Component Localization and Geopolitical Variables
Meeting the 70% component threshold remains a critical hurdle, particularly for core systems like batteries and drivetrains. As Song Sun-jae, an analyst at Hana Securities, stated:
“As the European EV market continues to grow, competition with Chinese manufacturers and supply chain restructuring are emerging as key variables for the automotive industry.” — Song Sun-jae, analyst at Hana Securities
The Ioniq 3, a Europe-focused compact EV that began mass production last month at the group’s Izmit plant in Turkey, introduces further complexity. Although Turkey maintains a customs union with the EU, it is not an EU member state — raising uncertainty over whether final assembly there qualifies as regional production under the IAA.
Meanwhile, BYD launched production at its first European passenger car plant in Hungary in January and plans to select a site for a second European production base by year-end. It has also outlined a long-term vision of operating three assembly plants and one battery plant across Europe. The EU plans to finalize detailed criteria in December, including how component ratios are calculated and whether production outside the bloc — such as in Turkey — will be recognized. If standards later expand to include battery cells or raw materials, Hyundai Motor Group may need to deepen partnerships with European suppliers or build additional local production facilities.
Source: finance.biggo.com
Compiled from international media by the SCI.AI editorial team.
