Car industry pressing EU for further delay to Brexit EV tariffs

A Volkswagen assembly line in Zwickau, eastern Germany. ‘Just under 20%’ of EV batteries will be made in the EU by 2027, according to a trade representative. Photograph: Ronny Hartmann/AFP/Getty Images View image in fullscreen A Volkswagen assembly line in Zwickau, eastern Germany. ‘Just under 20%’ of EV batteries will be made in the EU by 2027, according to a trade representative. Photograph: Ronny Hartmann/AFP/Getty Images Car industry pressing EU for further delay to Brexit EV tariffs Exclusive: deal in 2020 had sought to stimulate local battery making but industry says it still cannot meet targets The EU and UK car industries are urging the European Commission to adjust the Brexit trade deal and suspend, for a second time, tariffs on imports of electric vehicles. They have expressed concerns that they will not be able to meet the conditions set for 1 January 2027 for tariff-free sales. This is because of strict rules of origin over what products can qualify for tariff-free trade under the EU-UK Trade and Cooperation Agreement which has applied since 2021. Under the 2020 Brexit deal, 55% of a car’s value had to be made in Europe by 1 January 2027 to avoid tariffs, but 70% of the battery pack and 65% of the battery cell also had to be made in Europe. UK car sales hit post-Covid high for May as Chinese EV makers gain ground Read more It was originally envisaged that 30% of battery packs and battery cells would be made in the EU or the UK within years of the deal – with the rules of origin regime incentivising investment in domestic battery manufacturing. By 2023, it was clear this was not the case, partly because of Covid and partly because of shortages of semiconductors caused by Russia’s invasion of Ukraine. Under mounting pressure from the car industry, the European Commission agreed to suspend the rules for three years until the end of this year. But with seven months to go, the industry has told the commission that it cannot meet the “made in Europe” battery targets this time either. Jonathan O’Riordan, international trade director at ACEA, the European Automobile Manufacturers’ Association, said the industry had forecast that 60% of batteries across all segments, from cars to trucks, would be made in Europe by 2027 when the tariff schedule was first suspended in 2024. It is now estimated that by 1 January 2027 “just under 20%” of batteries will be made in the EU, said O’Riordan. In the UK, the level is higher, but still below targets, according to industry estimates. In Brussels on Friday, ACEA’s director general, Sigrid de Vries, said “the battery drive train development in Europe was far too slow” and they needed to see a “policy shift” at the European Commission to accelerate the transition. Mike Hawes, chief executive of the UK’s Society of Motor Manufacturers and Traders (SMMT), said: “Battery supply chains are still not ready to meet these stringent requirements, which were based on assumptions that have not materialised despite majo