Mercedes-Benz chief executive Ola Källenius has warned that excluding British manufacturers from European industrial preference rules would damage automotive production on both sides of the Channel, increasing pressure on Brussels ahead of negotiations over its proposed Industrial Accelerator Act.

The head of Mercedes-Benz has warned that excluding British manufacturers from the European Union’s proposed industrial preference rules would damage the competitiveness of carmakers across Europe, challenging Brussels over legislation intended to protect European production from growing international competition.

Ola Källenius, chief executive of Mercedes-Benz and president of the European Automobile Manufacturers’ Association (ACEA), criticised the prospect of restricting British participation in the forthcoming “Made in Europe” framework during discussions in Brussels on Wednesday, 14 October.

His intervention comes as European governments negotiate the Industrial Accelerator Act, which would introduce European-content requirements affecting public procurement and certain forms of industrial support.

The proposed legislation is intended to strengthen manufacturing within the EU, but its treatment of production in neighbouring countries has become contentious, particularly in an automotive industry whose factories and suppliers operate across national borders.

European production extends beyond the EU

British manufacturing remains closely integrated with continental European automotive production despite the United Kingdom’s departure from the single market.

Components manufactured in Britain are incorporated into vehicles assembled in EU member states, while British factories depend on engines, batteries, electronics and other parts produced in continental Europe.

The value of this integrated manufacturing system depends on companies being able to source components across borders without unnecessary restrictions.

Källenius warned that excluding the UK from the proposed rules would weaken manufacturers operating on both sides of the Channel.

His position reflects industry concerns that a narrowly defined European-content regime could impose additional costs on companies already facing pressure from Chinese competition, slowing demand and substantial investment requirements.

As EU Today reported in September, British Prime Minister Andy Burnham has been pressing Brussels to recognise the UK as a trusted industrial partner under the emerging framework.

Germany has also supported a broader approach that would allow selected trading partners to qualify under European-content rules where reciprocal conditions are met.

France has favoured stronger preferences for production within the EU itself, reflecting differences among member states over how far European industrial policy should extend beyond the Union’s borders.

A dispute over industrial sovereignty

The Industrial Accelerator Act proposed by the European Commission is intended to strengthen Europe’s manufacturing base and support production in strategically important sectors.

Its provisions address public procurement and industrial incentives affecting products including vehicles, steel, aluminium and clean technologies.

The Commission wants European public spending to support local industrial capacity rather than reinforce dependence on imports from major international competitors.

China has become the principal focus of those concerns because of its expanding manufacturing capacity, particularly in electric vehicles and batteries.

However, measures designed to counter Chinese industrial competition could also affect established trading partners whose manufacturers form part of European supply chains.

The United Kingdom, Norway, Switzerland and Turkey occupy different legal positions in their economic relations with the EU, but all maintain important industrial connections with member states.

An approach that treats their production as equivalent to imports from countries with substantially different market conditions could require European companies to reorganise existing supplier relationships.

For manufacturers, replacing a supplier may involve more than simply ordering components from another factory. Production standards, technical certification, logistics and long-term investment arrangements can make changes expensive and difficult.

Industry demands regulatory certainty

Following an ACEA board meeting on Wednesday, European manufacturers called for faster progress on the wider automotive legislative package.

In its 14 October statement, ACEA urged EU institutions to advance negotiations so that the package could be finalised early next year.

The association argues that manufacturers require a predictable regulatory framework to plan investments in electric vehicles, production facilities and new technologies.

Källenius linked the industry’s transition towards zero-emission mobility with the need to preserve employment and strengthen economic security.

European manufacturers are simultaneously investing heavily in electrification while competing against Chinese companies with established battery supply chains and significant production capacity.

The resulting financial pressures are particularly serious for manufacturers that must develop new vehicle platforms while maintaining existing factories and dealer networks.

Additional restrictions on component sourcing could complicate those decisions at a time when companies are seeking to reduce costs.

Britain refuses to follow EU tariffs automatically

The dispute has acquired a further dimension following remarks by British Business Secretary Jonathan Reynolds.

Speaking on Wednesday, Reynolds indicated that Britain would not automatically follow the European Union in imposing tariffs on Chinese vehicles.

The UK government maintains that trade measures must be determined according to British economic interests rather than adopted simply to align with Brussels.

That position complicates London’s attempt to secure favourable treatment under European industrial rules.

EU policymakers have argued that closer alignment on trade defences could support Britain’s claim to be treated as a trusted partner.

British ministers, however, must consider whether restrictions on Chinese imports would benefit domestic manufacturers and consumers.

The disagreement will form part of the broader economic relationship being discussed ahead of the next UK–EU summit, scheduled for 20 November.

The wider implications for EU–UK relations

The automotive dispute follows earlier negotiations over British participation in European defence procurement and other industrial programmes.

In both cases, London wants access to initiatives designed to strengthen European production while remaining outside the EU’s institutional framework.

Brussels must determine how far preferential treatment can extend to non-member countries without undermining the objectives of its industrial policy.

The Commission’s proposals have already revealed disagreements between governments favouring a tightly defined European manufacturing base and those seeking to preserve wider commercial partnerships.

Källenius’s intervention strengthens the argument that industrial protection cannot be considered separately from the supply chains on which European manufacturers depend.

The final legislation will influence investment decisions, procurement arrangements and the position of British suppliers within the continental automotive industry.

The outcome will also provide an indication of how far the EU is prepared to accommodate its closest trading partners as it attempts to strengthen European manufacturing against growing competition from China.

Rafael USA and Leonardo DRS have presented a capability that would allow fighting vehicles equipped with legacy Tube-launched, Optically tracked, Wire-guided (TOW) missile launchers to fire Rafael’s Spike LR2 anti-armor missiles. The effort builds on a demonstration dating back to 2021, with the companies now presenting a more mature adapter solution designed to integrate the Israeli-made missile into existing platforms.

Roman Palaria, Rafael’s vice president for marketing and business development in its land and naval division, discussed the system in an interview with TWZ at the Association of the U.S. Army’s (AUSA) main annual convention. He explained that the earlier demonstration, part of Project Convergence 2021, used a version of the adapter that had not yet reached its final configuration. Leonardo DRS, Rafael’s U.S. partner, subsequently developed the mechanical and electrical components needed to connect the Spike LR2 to the TOW launcher and the vehicle’s existing systems.

The approach is intended to avoid replacing the launcher or radically overhauling the vehicle’s gunner station. Instead, the adapter provides the mechanical interface for loading the Spike LR2 missile and the electrical connections needed to communicate with the vehicle. Additional electronic components are installed within the vehicle to support the missile’s functions.

“We’re doing minimum changes to the vehicle,” Palaria said, describing the goal of making the integration as seamless as possible for the operator.

The Bradley infantry fighting vehicle is a prominent potential application, although the companies say the capability could extend to other platforms that use TOW launchers. The Army has operated TOW-equipped vehicles for decades, creating a substantial installed base of launch systems that could potentially benefit from the approach. As for the Bradley, the Army effort to replace its TOW missiles has been a long one, but is yet to produce any real results.

Spike LR2 was successfully test-fired from M2A4 Bradley equipped with Multi-Purpose Missile Launcher (MPML), developed by Rafael and DRS. Adapters allow the system to remain compatible with existing TML/UTML launchers. Spike LR2 has also been proposed for the CCMS-H and XM30. pic.twitter.com/KB9EYwi6BI

— Ronkainen (@ronkainen7k15) October 13, 2026

After a missile is fired, its launch tube remains in the launcher and can be removed to accommodate another missile.

The central attraction of the system is the ability to combine existing launcher infrastructure with the Spike LR2’s unique engagement capabilities.

During Project Convergence 2021, two Spike missiles were fired from a TOW launcher, and both reportedly hit their intended targets. The adapter now being presented reflects subsequent development work by Leonardo DRS, including refinement of the mechanical interface and vehicle electrical integration.

The system is designed to preserve the vehicle’s existing TOW capability while adding the option to use Spike LR2. That would give commanders another missile option without necessarily requiring wholesale replacement of installed launcher equipment. The extent to which individual vehicles could use both missile types would depend on the completed integration and applicable qualification requirements.

The Spike LR2 offers capabilities that differ substantially from those of the legacy TOW missile. Palaria cited a maximum range of approximately 5.5 kilometers (3.4 miles) and highlighted the missile’s day/night imaging seeker, which provides video to the operator during flight. The longest-range TOW missile versions max out at around 4.5 kilometers (2.8 miles).

In contrast, Spike LR2’s imaging capability supports engagement of targets beyond the operator’s direct line of sight, as well as observation of the target area during the missile’s approach. Depending on the engagement, the operator can acquire a target through the missile’s seeker, adjust the engagement, or select a different target while the missile is in flight.

These features contrast with the traditional TOW’s semi-automatic command to line-of-sight (SACLOS) guidance, in which the gunner tracks the target through the launcher’s observation system and guides the missile throughout its flight. Spike LR2’s onboard imaging provides a different set of options for engagements in which direct observation is limited or target conditions change after launch. This can also include striking targets behind cover.

Palaria also described the LR2’s two warhead options. The first of these is a tandem-charge anti-tank warhead, which Rafael claims is able to penetrate any modern main battle tank. It consists of a precursor warhead and the main warhead, which are designed to penetrate the reactive armor, and the main armor, respectively.

The second option is a multi-purpose configuration. It has a programmable fuze, which allows the missile to be employed against different target types. Depending on the selected mode, the warhead can be configured for direct-impact or timed-detonation effects, for example, detonating above the ground for anti-personnel missions, or penetrating a building, in which case the first charge will make a hole in a wall, and then the second charge will go inside and explode after a short delay.

The adapter offers a potential route to adding new missile capabilities to existing Army vehicles while limiting changes to their launcher hardware and crew interface.

Operator training would obviously be necessary. Although the gunner would continue using the vehicle’s existing console and displays, Palaria acknowledged that Spike LR2 introduces additional functions, controls, and engagement procedures.

For the Army, the proposition is straightforward: retain a familiar launcher architecture while potentially adding a missile with greater reach, onboard imaging, and more flexible engagement options that exceed line-of-sight tracking. The adapter’s significance lies in making that combination possible without starting from a clean sheet.

Whether that capability becomes a fielded upgrade will depend on the Army’s requirements, testing, integration decisions, and procurement plans. But the widespread uptake of the Spike series of missiles around the globe, combined with the very large existing TOW missile operator base, means the adapter solution could well be of interest to customers outside the U.S. Army, too.

Contact the author: thomas@thewarzone.com

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