Posted on 01 Mar 2023
The UK automotive industry may benefit from a new agreement reached between the UK and the EU on the Northern Ireland deal, Kallanish reports.
The so-called Windsor Framework announced by Rishi Sunak and Ursula von der Leyen on 27 February seeks to provide a “new way forward” post Brexit. The agreement in principle addresses challenges faced by Northern Ireland under the Northern Ireland Protocol, which ensured no hard border between Northern Ireland (UK) and the Republic of Ireland.
It’s designed to vastly simplify the movement of goods from Great Britain to Northern Ireland. Goods that are destined for the EU or at risk of entering the bloc will still be subject to full customs checks and controls.
Mike Hawes, ceo of the Society of Motor Manufacturers and Traders (SMMT), says the new agreement is a welcome development if it allows for the streamlined flow of goods, including vehicles and automotive components, between Great Britain, Northern Ireland and the EU single market.
“We must now build on this renewed trust and momentum to unlock all elements of the TCA [Trade and Cooperation Agreement] and maximise the potential of the deal to benefit both the UK and wider European automotive industry,” he adds.
Von Der Leyen said the agreement will allow the parties “to turn the page towards a bilateral relationship that mirrors the one of close allies standing shoulder to shoulder in times of crisis.” The Commission chief also emphasized that “both sides are ready to fully exploit the potential of the Trade and Cooperation Agreement – the cornerstone of our future bilateral relations.”
The TCA, signed in December 2020, doesn’t match the level of economic integration that existed while the UK was an EU member state, but goes beyond traditional free trade agreements. It enables EU-UK zero-tariff and zero-quota trading of goods that comply with appropriate rules of origin, such as batteries and electric vehicles.
Some believe the closer relationship with the EU could enable an extension on the rules of origin’s grace period. From 2027, the UK can export electric vehicles into the EU market at a zero tariff if the vehicles have 55% UK/EU content and an originating battery pack. The latter must have either 65% UK/EU content for the cell or 70% for the battery pack. Meeting this timeline remains a challenge, given the UK currently has a 2 gigawatt-hour/year cell production capacity.
The Faraday Institution, the UK will need 10 gigafactories by 2040, with each plant producing 20 GWh/y. Currently, Envision AESC is developing an 11 GWh plant in Sunderland and AMTE Power has set out plans for a new 10 GWh plant to be operational by 2025. Britishvolt’s 38 GWh gigafactory project fell through with the company becoming insolvent, but hopes have been renewed with the recent acquisition of the firm by Australia’s Recharge Industries. The latter says it will make the Britishvolt gigafactory a reality for the UK battery and EV supply chain.
EV production in the UK increased 50% in January to 28,329 cars. Around 77% of that volume was exported to global markets, but primarily to the EU.
Source:Kallanish
