The European Commission proposed on Wednesday a “one-off extension” to the EU-UK current rules of origin (ROO) on electric vehicles and batteries, now to be voted by the European Council.
EC vice-president Maroš Šefčovič told a press conference the proposal was reached after a comprehensive assessment and discussion, with input from the European automotive, battery and chemical industries. It takes into consideration the “unforeseen circumstances” that impacted the European battery industry since the rules were designed in 2020, including soaring energy prices and increased competition from new international subsidy support schemes.
The proposal stipulates that the current ROO remain in place until 31 December 2026, with the stricter requirements entering into force on 1 January 2027, instead of 1 January 2024. It also includes a lock-in mechanism making it legally impossible for the EU-UK Partnership Council to change rules again before 2032.
“We have listened carefully to those concerns and therefore put a balanced, forward-looking proposal on the table. It supports the competitiveness of our industry and protects jobs in the EU,” adds Šefčovič.
The Commissioners have also announced €3 billion ($3.23 billion) in funding for EU battery manufacturers over the next three years. The new instrument will provide support, possibly as a fixed premium, to the European manufacturers of the most sustainable batteries. They expect the new investment, to start next year through the Innovation Fund, will also create spill-over effects on the entire value chain, including its upstream segment.
European automotive trade body ACEA welcomed the proposal on a three-year extension and urged the Council to approve the deal. “This is vital to ensure the well-being of not only EU BEV manufacturing, but also of the whole European battery value chain,” ACEA director general Sigrid de Vries says in a note.
Failure to approve the proposal would come with a “hefty price tag of €4.3 billion over the next three years for EU vehicle makers,” ACEA says. BEV production could shrink by 480,000 units, which the association estimates to be equivalent to the output of two average-size auto factories.
The UK’s Society of Motor Manufacturers and Traders (SMMT) did not immediately reply to Kallanish’s request for comment.
The EC says it will closely monitor whether the European automotive and batteries industries are “on the right track” to complying with the permanent rules of origin of the trade agreement, and achieving a headline benchmark of supplying at least 70% of their demand for batteries through domestic sourcing.