The EU and UK car industries are calling on the European Commission to revise the Brexit trade agreement and postpone tariffs on electric vehicle imports for a second time. They warn that manufacturers will be unable to satisfy the requirements due to take effect on 1 January 2027 for duty-free sales. The issue stems from strict rules of origin under the EU-UK Trade and Cooperation Agreement in force since 2021. The 2020 Brexit deal set a target of 55 percent European content for cars by that date to avoid tariffs, along with 70 percent for battery packs and 65 percent for battery cells. Initial plans foresaw 30 percent local content for packs and cells within a few years to encourage investment in European battery plants. By 2023 it became evident these goals would not be reached, owing partly to the pandemic and partly to semiconductor shortages triggered by Russia’s invasion of Ukraine. Following industry pressure, the Commission postponed the rules for three years until the end of this year. With seven months remaining, manufacturers have informed the Commission they still cannot meet the European battery-content targets. Jonathan O’Riordan of ACEA stated that the sector had projected 60 percent of batteries would be produced in Europe by 2027, yet current estimates show just under 20 percent. UK output is higher but remains below the required levels. ACEA director general Sigrid de Vries noted that battery development in Europe has been too slow and called for a policy shift. SMMT chief executive Mike Hawes said supply chains are not ready for the rules, which rested on assumptions that have not materialised. He urged both sides to reach a practical solution that prevents tariffs on vehicles consumers are encouraged to purchase. Difficulties in scaling up battery production have been worsened by China’s dominance of raw materials such as lithium and by manufacturing costs that remain 30 percent higher than in China. Although the Commission has introduced measures to support local output, establishing mines and full production chains takes years and substantial investment. A Commission spokesperson said discussions can occur within ongoing EU-UK talks and that the body remains in contact with EV stakeholders. The requests arise amid concerns over Chinese over-production and its potential impact on European manufacturing. European leaders are scheduled to discuss China on 18 June.
