From Tariffs to Conditional Integration: An EU Strategy for Chinese Electric-Vehicle Investment under the Industrial Accelerator Act

Europe does not face a simple choice between admitting inexpensive Chinese electric vehicles and closing its market to protect domestic producers. The harder question is how foreign manufacturing can support decarbonization without hollowing out the industrial and employment base that makes the transition politically sustainable. The European Commission’s proposed Industrial Accelerator Act (IAA) is an important but incomplete answer. Tariffs can buy time and origin rules can anchor production, but neither instrument alone can create software capabilities, retrain workers or strengthen regional suppliers. This paper compares defensive localization, managed openness and conditional integration, and recommends the third. Its three core proposals are a European Automotive Investment Compact, a Skills and Regional Transition Covenant, and a ring-fenced European Automotive Transition Financing Window. A software and data pillar and a structured implementation dialogue with China would support delivery. The aim is not decoupling or unconditional access, but the conversion of market-seeking investment into capabilities that Europe can retain. Keywords: European Union; China; electric vehicles; Industrial Accelerator Act; conditional integration