EU's Industrial Accelerator Act Faces Criticism for Failing to Fully Address Battery Supply Chain Onshoring, as Northvolt Bankruptcy Underlines Sector Vulnerability

A new analysis of the EU's Industrial Accelerator Act — the legislative package designed to strengthen European industrial competitiveness and secure critical supply chains — has identified significant gaps in its treatment of the battery manufacturing sector. The critique follows the bankruptcy of Northvolt, the Swedish battery maker that collapsed in early 2025, which exposed how fragile Europe's homegrown battery production capacity remains. The analysis points to a structural asymmetry in the Act's current form: battery electric vehicles (BEVs — battery-powered cars) sold through the corporate channel (which accounts for approximately 60% of new car sales) must use EU-made batteries and battery components to qualify for national tax incentives. However, BEVs sold into the private market operate under a broader definition of 'made in EU' that encompasses all countries with which the EU has signed free trade agreements — a rule that critics argue undermines the onshoring intent. The analysis specifically highlights cathode active materials as the most valuable component in a battery and the area of highest EU dependency on Chinese supply, describing the current regulatory treatment as insufficient to reduce that reliance. Separately, industry body VDMA (the German Mechanical Engineering Industry Association) commented on the EU Competitiveness Council's agenda, calling for a focused European Competitiveness Fund and questioning whether the Industrial Accelerator Act's local content and CO₂ emissions rules are sufficiently comprehensive to protect the broader EU industrial base.