Toyota Urges EU to Include Japan, UK and Türkiye in European Car Incentives

A 31 Million Vehicle Argument Against EU Only Rules

Toyota is asking the European Union to let cars built in Japan, the United Kingdom and Türkiye qualify for European industrial incentives, arguing that a market spanning the EU and trusted trading partners would reach about 31 million vehicles a year. Its appeal challenges where Europe should draw the boundary around the car industry it wants to protect.

In a statement dated 16 October 2026, Toyota Motor Europe called for changes to the proposed Industrial Accelerator Act, which would use public purchasing and financial support to strengthen European manufacturing. The company wants recognition for selected countries with free trade agreements or customs unions with the EU, provided they offer equivalent treatment in return.

The stakes extend beyond cars imported from Japan. Toyota operates vehicle factories in France and the Czech Republic, inside the EU, and in Britain and Türkiye, outside it. Rules tied to EU assembly and component sourcing could give different access to incentives to vehicles made within the same manufacturer's European production network.

Toyota Motor Europe President and CEO Yoshihiro Nakata described the company's position in its October policy statement:

Toyota is not a guest in Europe. We are a European manufacturer, and we want Europe's automotive industry to succeed

The dispute concerns which vehicles can receive public support, how much of their value must come from Europe and how quickly manufacturers must adjust their factories and suppliers. Toyota is also seeking changes to vehicle emissions rules, making its intervention a broader request to reshape the conditions under which it builds and sells cars in Europe.

What the Industrial Accelerator Act Would Change

The European Commission proposed the Industrial Accelerator Act on 4 March 2026. Its purpose is to strengthen strategic manufacturing while supporting the transition to lower emissions. Cars are part of a wider package covering products such as steel, concrete, aluminium and clean energy technologies.

The proposal would attach requirements concerning European production, low carbon manufacturing, or both, to certain public contracts and financial support. Public procurement means purchases by governments and public bodies. These purchasing decisions can create demand for qualifying products, while incentives can make eligible vehicles more attractive to buyers.

For vehicles, the proposal connects support to assembly location and the use of European components. Its vehicle provisions cover battery electric cars, plug-in hybrids and fuel cell vehicles. A plug-in hybrid combines an engine with a battery that can be charged externally; a fuel cell vehicle uses hydrogen to generate electricity.

The Commission's broader industrial target is to raise manufacturing's contribution to EU gross domestic product from 14.3% in 2024 to 20% by 2035. That is an increase of 5.7 percentage points. GDP measures the value produced by an economy, so this target concerns manufacturing's share of economic activity.

Trading Partners Already Have Some Recognition

The Commission's initial proposal already makes room for trading partners in several areas. For public procurement, products from countries covered by relevant free trade agreements, customs unions or the World Trade Organization's Government Procurement Agreement would receive equivalent treatment on a reciprocal basis.

Financial support would generally include similar recognition for trade agreement partners. Two important automotive measures, however, would be restricted to vehicles of EU origin: support for company vehicles with zero or low emissions, and special regulatory credits for small electric vehicles made in the EU.

Those credits would give qualifying small electric cars extra weight when a manufacturer calculates compliance with emissions rules. Toyota's request therefore reaches across several policies. It wants vehicles made with trusted partners to qualify consistently for public procurement, incentives and company fleet measures.

For a business choosing company cars, eligibility could affect the financial appeal of competing models. For Toyota, it could influence where to assemble a vehicle and where to buy its components. The company is asking the EU to apply a common approach across these decisions.

Toyota Wants Time and a Different Content Formula

Toyota proposes gradually introducing a requirement for 70% European content after three years. It wants the calculation based on the vehicle's ex-works value, broadly its value when leaving the factory, and wants engineering, research, development and final assembly to count toward that value.

That approach would recognise more than the physical origin of individual parts. A car assembled with some imported components can also contain substantial European engineering and manufacturing work. Toyota wants those activities included when policymakers decide how European a vehicle is.

The company also opposes what it describes as a proposed 85% threshold for overall vehicle sales, asking for 70% instead. This is a separate request from its proposed 70% vehicle content requirement. One concerns the value within a vehicle; the other concerns a threshold applied across vehicle sales.

Toyota says substantive automotive requirements should begin no earlier than 2030, allowing time for vehicle development and supplier investment. It also wants fuel cell vehicles temporarily excluded from localisation requirements while the market and European supply chain develop.

The legislation is still under negotiation in the European Parliament and the Council of the EU, which represents member governments. The final content percentages, eligibility rules and implementation dates have not been settled.

Why Toyota Points to Its European Factories

Toyota's argument rests partly on the scale of the manufacturing network it already operates. In 2025, it produced 877,000 cars and light commercial vehicles in Europe, a volume it described as equal to 80% of its European sales.

Production was spread across eight Toyota plants and five partner facilities, with 25,000 direct employees. At a Brussels event, Nakata said Toyota had invested more than €12 billion in Europe since 1990. Those figures explain why the company presents itself as part of Europe's industrial base rather than simply an exporter seeking access.

The geography creates a practical problem for Toyota. France and the Czech Republic are EU members; Britain and Türkiye are not. A production network organised around European customers can therefore cross the legal boundary used to determine access to EU support.

Toyota's proposed market of about 31 million vehicles combines the EU with trusted partners. The company says this larger scale would help manufacturers compete globally. Its request is for a limited group of partners offering reciprocity, rather than equal treatment for every country exporting vehicles to Europe.

Parliament Is Pushing for Stronger Protection

The European Parliament has moved in a stricter direction. A proposed parliamentary revision would require a higher proportion of components to be sourced within the EU than the Commission initially sought. That would increase pressure on manufacturers using suppliers outside the bloc.

Christophe Grudler, a member of the European Parliament serving as a joint rapporteur on the legislation, warned at a 14 September press conference that industry could disappear without action. A rapporteur helps lead Parliament's examination of a legislative proposal and negotiate its position.

The competing approaches share a concern about manufacturing jobs but differ over how to protect them. Supporters of tighter sourcing rules want public money to create more demand for EU production. Toyota argues that Europe also benefits from investment, engineering and supply relationships with selected countries outside the bloc.

Kengo Watatani of Mitsubishi Research Institute's Policy and Economy Center identified the investment stakes in a March policy analysis. He noted that the Commission's proposal included consideration for trade agreement partners such as Japan, while warning that revisions during negotiations could affect Japanese companies' investment decisions.

How the Debate Developed

The legislation and Toyota's response developed through several stages during 2026. The Commission's initial proposal included recognition for trading partners, while subsequent parliamentary proposals sought stronger European sourcing requirements.

• 4 March: The European Commission proposed the Industrial Accelerator Act, including production requirements linked to public purchasing and financial support.
• 18 March: Mitsubishi Research Institute published its analysis of the proposal and its potential effect on Japanese investment decisions.
• June: Nakata publicly called for recognition of the UK, Japan and Türkiye and advocated several routes to reducing vehicle emissions.
• 14 September: Grudler warned of the need to protect industry as Parliament pursued stronger requirements for European sourcing.
• 16 October: Toyota published detailed requests on trading partners, European content, implementation dates and emissions policy.

The next legislative steps involve consideration by the European Parliament and the Council. Toyota's October intervention seeks changes both to the industrial legislation and to the wider Automotive Package.

Toyota Also Seeks Changes to CO₂ Rules

Toyota's emissions proposals address a different question from factory location: how quickly the cars and vans manufacturers sell must reduce carbon dioxide emissions. The company wants a five year compliance window covering 2028 to 2032, allowing performance to be averaged across those years.

Averaging would let stronger results in one year balance weaker results in another. Toyota argues that this would give manufacturers more room to respond to changes in customer demand around 2030 and 2031.

The company forecasts that battery electric vehicles will account for about 45% of new cars by 2030, compared with the share of more than 55% it says current rules require. Those are Toyota's market forecast and its assessment of the regulatory requirement. The gap underlies its request for greater flexibility.

For 2035, Toyota is calling for a 90% reduction target for car CO₂ emissions, with additional flexibility involving renewable fuels and steel produced with lower emissions. For light commercial vehicles, mainly vans used by businesses, it proposes separate reductions of 35% by 2030 and 80% by 2035, alongside averaging over five years.

Toyota says vans need separate treatment because business buyers depend on driving range, carrying capacity and time available for work. Its proposed percentages and compliance arrangements are requests to policymakers.

Renewable Fuels, Hydrogen and the UK Review

Nakata has called for rules that allow battery electric, fuel cell, plug-in hybrid and renewable fuel technologies to contribute to cutting emissions. Toyota presents renewable fuels as a complement to electrification, including for vehicles already on the road.

The company wants vehicles running exclusively on eligible renewable fuels to receive zero emission recognition under a common EU definition aligned with the Renewable Energy Directive, known as RED III. This would be a regulatory classification; fuel eligibility and production would determine the conditions for qualifying.

Hydrogen infrastructure is another part of its position. Nakata has urged implementation of the Alternative Fuels Infrastructure Regulation to deliver hydrogen refuelling commitments, particularly for heavy transport. Vehicles need suitable refuelling facilities along the routes where operators use them.

Toyota is also asking Britain to align its Zero Emission Vehicle mandate more closely with the EU approach. It proposes maximum required shares of 50% for cars and 40% for light commercial vehicles in 2030, with flexibility, and wants the UK review completed in 2027. It also seeks a clear framework for 2035 and a similar approach to compliance over five years.

Matt Harrison, Toyota Motor Europe's Chief Corporate Officer, summed up the company's partnership argument in the October statement:

Isolation makes us weaker.

For Toyota, the immediate choices concern which factories and models qualify for support, how supplier spending is counted, and how much time manufacturers receive to change production. EU lawmakers must decide how tightly to tie public support to production inside the bloc while pursuing their industrial and climate targets.

Key Points

• Toyota wants vehicles made in Japan, the UK and Türkiye to qualify for EU industrial support alongside EU production.
• The Commission's proposal already recognises trading partners in several areas, but reserves certain automotive benefits for EU origin vehicles.
• Toyota proposes 70% European content after a transition and no substantive automotive requirements before 2030.
• The company produced 877,000 vehicles in Europe in 2025 and says it has invested more than €12 billion there since 1990.
• Parliamentary proposals seek stronger European component sourcing, while the legislation remains under negotiation.
• Toyota also seeks revised emissions targets, compliance averaging and recognition for eligible renewable fuels.