The UK automotive industry has today welcomed the European
Commission’s proposal to extend the current rules of origin for
electric vehicle batteries under the Trade and Cooperation
Agreement (TCA) until 2027 – and urged every government to back
it. The Society of Motor Manufacturers and Traders (SMMT) said
extending the rules for three years would avoid a tariff
cliff-edge in just 26 days’ time, allowing the UK and EU
automotive industries to continue to sell EVs into each other’s
markets without penalty.
SMMT, alongside its EU counterparts, has warned consistently of
the threat tougher locally sourced content requirements would
pose to the industry on both sides of the Channel, if applied
from 2024. While the industry has invested billions in EV
production both in the UK and EU, local battery supply needs more
time to expand to meet demand. If the rules go ahead as
originally planned, EVs traded both ways would be subject to a
10% tariff – adding billions of pounds in costs, pushing up
prices for consumers, and rendering both UK and EU manufacturers
uncompetitive in each other’s markets. It would severely
undermine the transition to zero emission mobility, sending the
wrong message to consumers about governments’ commitment. The
automotive industry is therefore calling for the urgent agreement
of the proposal, followed by delivery at pace.
Mike Hawes, SMMT Chief Executive, said,
“Adopting the Commission’s proposal would be a pragmatic
solution, safeguarding the future of the EU and UK automotive
industries, supporting motorists, the economy and the
environment. Such an extension would avoid damaging tariffs on
the very vehicles we need consumers to buy, allow UK and EU
manufacturers to compete with the rest of the world and,
crucially, give the European battery industry time to catch up.
Above all, voting for the proposal will enable us all to cut
carbon emissions while supporting growth and jobs across the
entire EV supply chain. We urge every party to get behind
it.”
EU-UK trade in electrified vehicles has more than doubled under
the tariff-free conditions provided by the Trade and Cooperation
Agreement (TCA). The EU is by far the UK’s largest automotive –
and indeed electric vehicle – market, and the UK sources almost
half of all new battery electric vehicles from the EU. Any cost
increase would act as a barrier to uptake, undermining their
competitiveness.
