In this post for Linklaters, authors Christoph Barth, Elisha Kemp & Stephanie Coleman look into the EU’s draft Industrial Accelerator Act and its implications for foreign investment in strategic industries. The proposal represents a shift in EU industrial policy, aiming to strengthen domestic manufacturing and reduce reliance on external supply chains. It focuses particularly on sectors linked to the net-zero transition—such as batteries, electric vehicles, solar technologies, and critical raw materials—which together represent a significant share of EU manufacturing. The Act also sets a broader objective of increasing EU manufacturing’s share of GDP to 20% by 2035.
The proposal emerges from concerns about Europe’s declining industrial competitiveness and growing dependence on foreign production, particularly from China. Policymakers have highlighted falling manufacturing output, pressure on key sectors such as automotive production, and concentrated global supply chains in technologies central to the energy transition. The Act is presented as part of a wider effort to respond to these vulnerabilities by ensuring that foreign investment contributes to local industrial development through technology transfer, domestic supply chains, and job creation.
The framework would apply additional foreign direct investment controls to large investments in specified emerging sectors. It targets investors from countries controlling more than 40% of global manufacturing capacity in those sectors and applies to investments above €100 million that result in control of an EU asset or company. A tiered review process is proposed, with national authorities handling most reviews while the European Commission may intervene directly in larger investments. The regime would also allow scrutiny of investments made through EU subsidiaries if necessary to prevent circumvention.
Where the thresholds are met, foreign investors must comply with a set of “value-added” conditions to proceed with the investment. These include limits on ownership stakes, requirements to form joint ventures with EU partners, obligations to share intellectual property and conduct R&D within the EU, workforce requirements ensuring a majority of EU employees, and commitments to integrate EU-based inputs into supply chains. The Act would operate alongside existing EU investment screening rules, creating parallel review regimes before investments can be implemented, and the proposal must still pass through the EU legislative process before adoption.
