Posted on 03 Nov 2023
European automotive leaders are stepping up their call for a three-year extension to existing trade rules between the UK and the European Union, asking authorities to act “immediately.”
BMW Group, Volkswagen Group, Hyundai, Mercedes-Benz, Renault, Volvo Group, Daimler Truck, Jaguar Land Rover and Ferrari are among the signatories to a letter recently sent to European Commission’s president Ursula von der Leyen. The companies, alongside European trade body ACEA, say they stand “willing and ready” to discuss this and other critical industry issues. Von der Leyen has not publicly responded.
“We ask you to support an amendment to the ROO [rules of origin] annex in the TCA [trade and cooperation agreement] to act as a bridging mechanism to get from today to a point in time when we will have a more developed battery industry in the EU and a strong EV production base on which to compete internationally,” they say.
“At this critical juncture in our industry’s green transformation, the application of unachievable rules of origin will have significant direct consequences in terms of potential loss of EV manufacturing output in Europe,” they continue.
The manufacturers are asking for “short-term flexibility” to provide “the most appropriate solution” for the time being. They ask that the existing rules remain in place until the end of 2026. After that ROO should become more restrictive, they add.
As the EU fights Chinese subsidies to ensure its EV market remains competitive, the companies warn that the proposed new ROO starting in January 2024 will lead to further market share loss. “If things stay as they are, 90% of our EV exports to the UK will be subject to tariffs next year, leading inevitably to lost market share to global competitors and lost EV production in the EU,” they argue.
From 2024 until the end of 2026, the second transitional period of the EU-UK trade agreement post-Brexit, battery parts and certain battery materials need to originate in the EU or UK to be eligible for free trade. ACEA says the expected compliance rate would be 10% next year, meaning the remaining EVs would be subject to a 10% trade tariff.
“We need a joint UK-EU solution to avoid consumers facing tariffs on electric vehicles from 2024,” a spokesperson for the UK Business and Trade Department told Kallanish on Thursday. “We have raised this with the European Commission and industry and are ready to work with them to find a solution within the existing structure of the Trade and Cooperation Agreement.”
The government won’t comment on its engagement with the EU. Sources close to the matter suggest that in the coming months, the government will build on interventions with “decisive action to ensure future investment in zero-emission vehicle manufacturing.”
The UK is the EU’s number one market for vehicle exports by volume, including EU-made battery electric vehicles. The EU is also the UK’s largest auto export destination.
Source:Kallanish