Germany backs calls to extend deadline on EV rules of origin changes

Brexit | | MIC Customs Solutions |

The UK's efforts to delay changes to rules of origin for electric vehicle imports to the EU have received the backing of the German chancellor, it has been reported.

Germany has given its support to calls from the auto industry to delay changes to rules of origin requirements for the import of electric vehicles (EV) between the UK and EU, it has been reported.

Tougher rules set to come into force from January 2024 will require 45 percent of the value of an EV to originate either in the UK or EU in order to avoid tariffs of ten percent when shipped across the English Channel. However, at present, carmakers will struggle to reach this threshold as the critical high-value batteries are still mostly sourced from Asia.

In public, the EU has been firm that there will be no delays to the new rules, which were set out as part of the post-Brexit Trade and Cooperation Agreement between the UK and EU. 

However, the Financial Times has reported that Brussels could come under pressure from the bloc's biggest exporter of cars following a change in strategy within the coalition government in Berlin.

The news source stated that chancellor Olaf Scholz has decided to back the UK's calls for a three-year delay and push the European Commission for a postponement, citing two sources close to the matter.

Automakers on both sides of the channel, including German brands, have warned that the new rules will significantly weaken Europe's EV sector at a time when manufacturers are facing increasing competition from Chinese rivals.

It was recently noted by the European Automobile Manufacturers’ Association that Chinese imports - which are already subject to tariffs - accounted for almost a third of UK EV sales in 2022 - up from just two percent in 2019.

The organization also forecast that if the rules of origin threshold is increased from 2024, EU carmakers will lose €4.3 billion and cut production by almost 500,000 electric vehicles over the next three years.

It was also recently reported that there is growing support for a delay within Brussels. Politico has reported that EC trade commissioner Valdis Dombrovskis has been privately arguing in favor of an extension.