"The Industrial Accelerator Act means the environment is finally being set up for our companies to compete with China on equal terms."
That was how an official at a domestic battery company answered when asked what Europe's Industrial Accelerator Act (IAA) would mean for Korean firms. I had expected talk of windfall gains, as with the U.S. Inflation Reduction Act (IRA). Instead, the emphasis fell on "equal terms."
The IAA focuses on strengthening manufacturing within the bloc. The idea is to lift demand for European-made products by applying local production requirements to public procurement and support programs. Because it aims to raise manufacturing's share of gross domestic product and expand "Made in Europe," it has also been called Europe's version of the IRA.
But its impact on Korean companies is unlikely to mirror that of the IRA. The U.S. law paired support for domestic production with mechanisms to reduce reliance on Chinese supply chains. For Korean firms, that meant an expected windfall as China's foothold narrowed.
Europe's situation is more complicated. The direction of reducing dependence on China is similar, but industrial conditions and interests differ across member states. European automakers that operate production bases in China and sell into that market must also weigh the burden of tighter rules. That is the backdrop for one battery industry researcher's comment: "The direction will be similar to the U.S. IRA, but how strong it will be remains to be seen."
Industry reactions run along the same lines. In North America, growth in the energy storage system (ESS) market driven by power demand, combined with the effects of supply chain realignment, is opening opportunities for Korean players. Europe's related market is also expected to grow. Yet the IAA alone is unlikely to create conditions that favor Korean companies. If Chinese firms expand output at their existing European plants, they can satisfy the local production requirements.
That is also where the IAA's significance for Korean battery makers lies. Until now, Korean firms have had to compete against low-priced products that Chinese companies built on the back of vast supply chains. If production requirements within Europe are tightened, Korean firms will be able to compete on product and technology under comparable conditions. It is not a policy that guarantees immediate benefits, but it can at least serve as an occasion to correct the balance on a tilted playing field.
What comes next is what matters. Once competitive conditions become similar, corporate competitiveness will decide who wins. Korean firms will have to stay ahead of Chinese rivals in technology, local production capacity and customer acquisition to win back the European market. The IAA is clearly an opportunity for Korea's battery industry, but that is precisely why the industry cannot lean on policy alone. If policy has evened out the starting line, seizing the win is up to the companies.
