Europe’s ‘Made in EU’ rules start at 5%, and they do not mention software

The Industrial Accelerator Act arrived on 4 March 2026 as COM(2026)100, alongside an impact assessment and three staff working documents, per the European Commission.

Its formal title says what it is for. It establishes a framework for accelerating industrial capacity and decarbonisation in strategic sectors.

It is a proposal, not a law. It is now in the ordinary legislative procedure, with Parliament and Council still to take positions.

What the Act actually requires

The origin rules are specific and sectoral rather than general. From 1 January 2029, concrete and mortar used in buildings, infrastructure or vehicles must carry at least 5% Union-origin content.

Aluminium must carry 25%. Steel escapes origin requirements entirely and faces low-carbon criteria instead.

Cars get the strictest treatment. Electric, plug-in hybrid and fuel-cell vehicles face EU assembly requirements, minimum EU content thresholds for components and specific battery sourcing rules, six months after the Act enters into force.

Net-zero technologies get their own differentiated thresholds through amendments to the Net-Zero Industry Act, covering solar, batteries, heat pumps, wind and nuclear.

The scope is drawn by NACE code. Energy-intensive industries C17, C19, C20, C22, C23 and C24, plus automotive C29.

Read the smallest number twice

Five per cent is not an industrial policy, it is a signal. A rule requiring one part in twenty of the concrete to come from Europe will not on its own rebuild a supply chain.

Aluminium at 25% is more serious, and it still leaves three quarters of the metal sourced anywhere.

There is a reason for the modesty. The Act also carries general derogations wherever origin requirements would produce insufficient competition, disproportionate costs, technical incompatibility or significant delays.

That is sensible drafting and it is also a large door. The teeth of this Act are in the automotive and net-zero chapters, not in the headline phrase.

What it does not cover, and what people think it covers

Here is where the European tech conversation has run ahead of the text. Nothing in the origin rules touches engineering software, cloud hosting or design tools.

Christina Rebel, chief executive of the engineering collaboration platform CAD ROOMS, argues to tech.eu that it should.

“If Made in EU becomes a condition of public procurement, the conversation can’t stop at the product rolling off the line,” she said. “It has to start much earlier.”

That is a case for extending the Act. It is worth reading as advocacy rather than as a description of the current draft, because the current draft is about concrete, cars and solar panels.

The gap she points at exists anyway

Strip out the legislative framing and a real problem remains. Most European engineering teams run product development on US-hosted platforms.

Every CAD file, every revision and every piece of design IP sits on infrastructure outside EU jurisdiction. A procurement label on the finished product does not change that.

The desk has covered the same argument in cloud, where Airbus and Scaleway built a sovereign cloud against the American hyperscalers.

It runs through every version of the digital sovereignty debate on this continent, and hardware design is the least examined corner of it.

Rebel sells the alternative, which should be said plainly rather than discovered later. CAD ROOMS is EU-hosted, end-to-end encrypted and ISO certified, and it competes with the US platforms she is describing.

That does not make the observation wrong. It does mean the person making it benefits if the rules move her way.

The part of her case with no commercial interest attached

The electronics problem is the strongest thing in the interview, and she gains nothing from raising it. Enclosures can be fabricated in Europe or the US. The components inside them frequently cannot.

“The core electronic components simply weren’t available locally, or the European pricing made the final product uncompetitive,” she said.

The depth of the Chinese ecosystem is the reason. Component suppliers, manufacturing expertise and entrepreneurs sit within reach of each other, and the same pattern is now visible in robotics.

The desk has the number for that. China builds 97% of humanoid robots shipped worldwide.

The prototype gap the Act was never designed to close

The constraint bites earliest, which is exactly where the IAA does nothing. Rebel describes founders receiving European manufacturing quotes that make a first working prototype economically impossible.

Sometimes what a hardware startup needs is €20,000 or €50,000 to reach that prototype, she said.

A company may need validation from its first thousand customers before investors will fund the next stage. Reaching those customers often means manufacturing at least part of the product outside the EU.

The Act is a demand-side instrument for volume goods bought by governments. It has nothing to say to a five-person team trying to build one unit that works.

The clause that does not name China

One provision deserves more attention than it has had. The Act screens foreign investments above €100m where the investor comes from a country accounting for at least 40% of global production of the technology concerned.

Four sectors qualify: battery technologies and storage, electric and fuel-cell vehicles, solar photovoltaics, and critical raw materials.

Investors must then satisfy four of six conditions, including a minority stake, an R&D commitment worth at least 1% of annual revenue in the Union, and at least half the workforce inside the EU.

The 40% test names no country. Everyone who reads it knows which one it describes.

The counterargument, which Europe keeps making to itself

The obvious objection is that none of this builds anything. TNW has run the argument that you cannot regulate your way to sovereignty, and it applies here with force.

Rebel’s own capital complaint is also getting less true. Cambridge Aerospace raised $300m at $3.4bn for drone interceptors, less than two years after founding.

Money does follow European hardware now. It follows defence and deep tech with obvious buyers, and it still does not follow a €30,000 prototype.

What would settle it

Three things, all inside the legislative process. The first is whether Parliament or Council extend the origin rules beyond physical goods, because that is the change Rebel is arguing for and nobody has tabled it.

The second is whether the thresholds rise. Five per cent survives contact with lobbying easily. Twenty-five per cent does not.

The third is the derogations. If contracting authorities can invoke disproportionate cost whenever European supply is expensive, the Act will apply mostly where it was not needed.

Rebel says Europe is at the cusp of a hardware age. The Act now in front of Parliament is about concrete, aluminium and cars, and the tools that design them remain somebody else’s jurisdiction.