The "China–free" automotive myth: What EU law really says

The rumour mill

Rumours have been swirling that EU law requires (or will require) automotive components and technologies to be "China-free," similar to restrictions the US Department of Commerce has imposed on connected vehicles from China. If true, this would be a game-changer for Chinese vehicle manufacturers and component suppliers trying to break into Europe's massive automotive market. However, this is a misconception.

The bottom line: No blanket ban exists

There is no general EU law or regulation that explicitly bans Chinese companies or Chinese-origin components from the automotive sector. No EU member state has implemented "China-free" requirements specifically for automotive components or technologies.

There is no law that bans Chinese companies or technology in the automotive domain simply because they are Chinese, unless specific concerns about subsidies or security arise in particular in relation to procurement contracts.

There is also no industry standard or EU certification requirement stating that automotive components "must be China-free".

So where's the confusion coming from?

Companies making such claims may be misinterpreting the EU's risk-based security frameworks, or may be referring to specific national measures in certain member states, voluntary corporate policies that go beyond legal requirements, or procurement decisions.

The confusion appears to stem from several factors: there are procurement tenders with "security clauses" or "trusted suppliers" requirements that might exclude Chinese suppliers; the Foreign Subsidies Regulation, which allows the exclusion of bids advantaged by foreign government subsidies, is affecting in particular Chinese companies; political rhetoric about reducing dependency on Chinese technology has been rife across the EU; EU trade defence measures against imports from China (like the duties imposed on Chinese EVs) are on the increase; and national security exceptions for critical infrastructure often hit Chinese companies. 

How the EU actually approaches this: Risk, not origin

Several EU legal instruments address security, procurement, and supply chain concerns that may indirectly affect Chinese suppliers through risk-based assessments rather than categorical exclusions.

• Cybersecurity and AI rules

The NIS2 Directive applies to critical infrastructure, including transport sectors, and requires cybersecurity risk management but does not explicitly ban Chinese suppliers. Similarly, the Critical Entities Resilience Directive focuses on physical resilience of critical entities but does not mandate exclusion of specific countries' suppliers.

The Cyber Resilience Act establishes cybersecurity requirements for products with digital elements, including potentially automotive components, but does not mandate country-specific exclusions. The EU AI Act doesn't explicitly ban technologies purely based on their country of origin. Instead, it sets risk categories and safety, privacy, and transparency obligations.

• The 5G Playbook

The telecommunications sector provides the most relevant precedent. The EU 5G Cybersecurity Toolbox allows EU member states to restrict or exclude "high-risk suppliers" from critical network functions based on security assessments. Whilst not naming China explicitly, this has been applied to limit certain Chinese telecommunications suppliers (such as Huawei) in some member states' 5G networks.

However, this approach is risk-based, not a blanket ban, and applies primarily to telecommunications infrastructure rather than the automotive sector.

• The subsidy question

The Foreign Subsidies Regulation (“FSR”) allows the European Commission to investigate and potentially block transactions involving companies that have benefited from foreign subsidies, including from China, but this is not a ban on Chinese suppliers per se. The FSR does not provide that technology or products from certain non-EU countries must be excluded. It doesn't ban Chinese suppliers across the board. It addresses subsidies (financial contributions), not nationality.

• Investment screening 

The EU's investment screening framework can apply to investments from non-EU countries (including China), especially if they may affect security or public order. However, this is about investment and ownership, not about banning all technology from certain countries.

What EU Member States are actually doing

Whilst some EU member states have restricted Chinese suppliers in telecommunications infrastructure (particularly 5G networks), there is no EU-wide harmonised approach to excluding Chinese suppliers. There are no EU member states with a general "China-free" requirement for automotive components or technologies.

The restrictive camp (but only for telecoms)

Germany has taken a hard line on telecoms. It decided to ban critical components from Chinese firms Huawei and ZTE in the core parts of its 5G networks by the end of 2026, and to replace "critical management systems" by the end of 2029. However, Germany, which is home to major automotive manufacturers (Volkswagen, BMW, Mercedes-Benz), has not implemented China-free requirements for vehicles or automotive technologies.

France passed what is sometimes called an "anti-Huawei law" in 2019, subjecting 5G operator equipment to an authorisation scheme with varying licence durations, restricting access to "core" networks in sensitive areas, and limiting licence renewals. Yet France has no specific restrictions on Chinese suppliers for automotive components.

Sweden banned Chinese suppliers (Huawei and ZTE) from 5G infrastructure in October 2020, making it one of the most restrictive EU member states, though this applies to telecommunications infrastructure, not directly to the automotive sector.

The open-door approach

Examples of an open-door approach include Spain which has no ban on Chinese suppliers in 5G networks, with major operators continuing to use Huawei equipment, applying EU-level security requirements without country-specific exclusions.

Hungary has close economic ties with China and no restrictions on Chinese suppliers in telecommunications or other sectors, with Huawei maintaining significant presence, including R&D centres.

The automotive reality check

Many European vehicle manufacturers have extensive supply chains involving Chinese component suppliers and many of them have entered into partnerships with Chinese technology companies (e.g., battery suppliers, sensor manufacturers). "China-free" requirements for automotive components or technologies would disrupt these supply chains and block access to strategically important technologies, thereby harming the European industry. 

What's coming down the pipeline

No current EU proposal requires automotive components or technologies (software or hardware) to be free of components from Chinese origin in a blanket way.

However, the landscape is shifting. The European Commission’s Action Plan of 5 March 2025 for the automotive industry introduced non‑binding language signalling possible “European preference” measures, referring to strengthened rules of origin, reduced import dependence, and greater EU value added in automotive production.

In December 2025, the European Parliament and the Council agreed on a final text of a 2024 EU Commission proposal to harmonise and expand foreign investment screening across EU member states. While it does not introduce any EU‑content requirements, the proposal includes the transport industry (including automotive) among the sectors to be screened. 

Even more importantly, calls for European content requirements have been gaining traction in the automotive industry and have resulted in legislative proposals both at EU and national level. The European Commission’s Automotive Package that was published in December 2025 contains a variety of European content or “made in Europe” proposals. For instance, the Package proposes incentives, including “super‑credits", for small EVs “produced in the EU”. The proposed Regulation on clean corporate vehicles precludes Member States from granting financial or fiscal support for zero- or low-emissions vehicles that are not “made in the EU”. The revised CO₂ emission standards will allow manufacturers to offset up to 10% of remaining emissions after 2035 using low‑carbon steel that is “melted and poured in the EU”. Moreover, the Commission has announced that the forthcoming Industrial Accelerator Act will propose EU content requirements for batteries and their components where public support is provided. 

Similar proposals have also been presented at national level. For instance, France has proposed linking flexibility in the EU's 2035 combustion engine ban to local content requirements. The French government wants to introduce a "super-credit" that would reward carmakers who sell vehicles with European content - such as European batteries or green steel - with flexibility to put plug-in hybrids on the market after 2035. A senior French official suggested that the EU should take inspiration from what China and the U.S. already do by imposing local content conditions, and that range extenders - small combustion engines that give battery-powered cars more range - could also benefit from the flexibility.

Under the French proposal, a vehicle would be considered "Made in Europe" if at least 75 percent of the added value is produced in the bloc and it also contains critical components in areas like electronics and batteries originating from the EU. The proposed three-quarter threshold echoes regulations in the U.S., Canada and Mexico, which also require 75 percent local production content in North America.

Given the EU's emphasis on strategic autonomy there is increasing regulatory and political interest in reducing dependencies, ensuring supply chain security, and safeguarding critical manufacturing capacity in Europe. The proposals for local content requirements for vehicles or specific automotive components incentivise European production rather than explicitly banning foreign components. However, it is possible that future legislation or procurement rules might more strongly constrain or condition the use of non-European (including Chinese) components in automotive technologies.

There can be little doubt that a move toward something explicitly forbidding Chinese technology in automotive systems would be controversial. As mentioned above, many European vehicle manufacturers have Chinese component suppliers or use Chinese automotive technologies. Various OEMs and automotive industry organisations have therefore warned against local content requirements, highlighting that these would disrupt supply chains, block access to strategically important technologies, increase costs, create a risk of retaliation and create additional administrative burden.