New rules of origin changes 'to cost EU carmakers €4.3bn'

Brexit | | MIC Customs Solutions |

An industry group representing European carmakers has warned new rules of origin for EV imports will cost the sector over €4 billion.

Upcoming changes to EU rules of origin requirements for electric vehicles traded between the bloc and the UK could cost automakers up to €4.3 billion over the next three years, an industry group has claimed.

The European Automobile Manufacturers’ Association (ACEA), which represents 14 major manufacturers with operations in Europe, including BMW, VW, Ford and Toyota, also warned that the stricter rules would result in EV production dropping by 480,000 units over the same period. This would be the equivalent output of two average-size auto factories.

It therefore made an "urgent plea" to the European Commission to act immediately in order to prevent the new duties from going into effect from January 1st 2024.

Luca de Meo, ACEA president and chief executive of Renault Group, warned that if the move goes ahead, the EU will "effectively be handing a chunk of the market to global manufacturers".

He added: “Driving up consumer prices of European electric vehicles, at the very time when we need to fight for market share in the face of fierce international competition, is not the right move - neither from a business nor an environmental perspective."

The changes in rules of origin will see the percentage of an EV's battery that must originate in either the EU or UK increase to 60 percent, while 45 percent of a car's total value must come from the UK or EU.

Vehicles that fail to meet this threshold will be subject to a tariff of ten percent, whether they are being exported from the UK to the EU or vice-versa. At present, the ACEA warned it will be "practically impossible" to source enough critical parts without relying on imports from places like China.

However, Mr De Meo said there is a "very simple and straightforward solution" to this, which is to extend the current phase-in period for battery rules by another three years. This would give the UK and EU battery industries the time they need to ramp up local production.

Despite calls from the industry, the European Commission has shown no sign of shifting its position on the new rules of origin. In an interview with the Guardian last week, internal market commissioner Thierry Breton stated it would be wrong to reopen the Brexit deal to aid carmakers.

He said: "If something has been negotiated, it shouldn't be changed."