The European and UK automotive industries are calling on the European Commission to extend the suspension of tariffs on electric vehicle (EV) trade under the EU-UK Trade and Cooperation Agreement (TCA), citing ongoing challenges in meeting local battery sourcing requirements.
Under the post-Brexit trade agreement, vehicles must meet specific rules of origin requirements to qualify for tariff-free trade. Beginning January 1, 2027, at least 55% of a vehicle’s value must originate in Europe, while 70% of battery packs and 65% of battery cells must be produced within the EU or UK.
The requirements were designed to encourage investment in domestic battery manufacturing. However, industry representatives say battery production capacity has not expanded quickly enough to meet the upcoming targets. In 2023, the European Commission agreed to temporarily suspend the stricter rules until the end of 2026 following concerns from manufacturers.
With the deadline approaching, automotive groups including the European Automobile Manufacturers’ Association (ACEA) and the UK’s Society of Motor Manufacturers and Traders (SMMT) are urging policymakers to consider additional flexibility.
According to ACEA, industry forecasts initially expected around 60% of batteries used across vehicle segments to be produced in Europe by 2027. Current estimates suggest that figure may remain below 20% by the start of 2027.
Industry leaders point to high production costs, supply chain constraints, and the lengthy process of developing battery manufacturing facilities and raw material supply networks as key obstacles. Battery manufacturing costs in Europe remain significantly higher than in China, adding further pressure on competitiveness.
ACEA Director General Sigrid de Vries said Europe’s battery development has progressed more slowly than anticipated and called for policy measures to accelerate investment and production. SMMT Chief Executive Mike Hawes stated that battery supply chains are not yet sufficiently developed to satisfy the planned requirements despite substantial industry investment.
The European Commission said discussions on the issue can take place within the framework of ongoing EU-UK negotiations and noted that it remains in regular contact with stakeholders in the EV sector to assess preparedness for the rules of origin requirements.
The debate comes as policymakers continue efforts to strengthen regional battery manufacturing capabilities while supporting the transition to electric mobility. European leaders are expected to discuss China-related trade and industrial issues during upcoming meetings later this month.
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