The European Union’s (EU) new post-Brexit trading rules could result in a financial loss of £3.75 billion for European electric vehicle manufacturers over the next three years, according to the Association of European Automobile Manufacturers (ACEA). These rules, known as “rules of origin,” require electric vehicles manufactured in the EU to be made from locally produced parts. It is therefore crucial that vehicles use batteries from the UK or EU.
However, manufacturers on both sides of the Channel say they are not adequately prepared for these regulations. Failure to comply with the established criteria would result in tariffs of 10% on the transport of electric vehicles across the English Channel, potentially leading to higher prices and higher production costs. As a result, ACEA is calling on the European Commission to postpone the implementation of these rules for three years.
The impact of these rules goes beyond manufacturers’ financial losses. Production in EU factories could fall by 480,000 vehicles, putting jobs and the economy at risk. Additionally, customers could have to pay higher prices as tariffs could make electric vehicles less affordable.
The UK is the largest export market for EU manufacturers, with 1.2 million vehicles arriving at UK ports in 2020. Likewise, the EU imports more vehicles from the UK than any other region. Therefore, the implementation of these rules can have far-reaching consequences for both sides.
Luca de Meo, CEO of Renault and president of ACEA, warns that compliance could lead to a loss of market share to global manufacturers, which is not the desired outcome. To delay the implementation of these rules, an agreement must be reached between the UK and the EU. While British Business Secretary Kemi Badenoch remains optimistic about the negotiation process, EU Internal Market Commissioner Thierry Breton has said there is no need to reopen the Brexit agreement.
The European Commission defends the rules and emphasizes the need to build a robust and resilient battery value chain in the EU. EU and UK trade officials are expected to meet this week, although it is unclear whether the new rules will be discussed. The outcome of these negotiations will have a significant impact on the future of the electric vehicle market in Europe.
The definition:
1. EU-UK Trade and Cooperation Agreement: The trade agreement between the European Union and the United Kingdom that sets out the terms of their trading relationship after Brexit.
2. Rules of Origin: Rules that determine the origin of a product to determine eligibility for preferential treatment such as lower tariffs in international trade.
3. Tariffs: Taxes levied on imported or exported goods.
Sources:
BBC News – „Brexit deal on electric cars could cost EU manufacturers £4.5bn“
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2023-09-25 00:48:00
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