The European Commission has proposed a three-year extension of the current rules of origin for electric vehicles (EVs) and batteries under the EU-UK Trade and Co-operation Agreement (TCA).

The deal would avoid the imposition of 10% tariffs on the export of European-built battery electric vehicles (BEVs) to the UK.

The rules were designed in 2020 to incentivise investment in the EU’s battery manufacturing capacity.

However, circumstances including Russia’s war against Ukraine, COVID-19’s impact on supply chains and increased competition from new international subsidy support schemes, have led to a situation where the scaling-up of the European battery ecosystem has been slower than initially anticipated.

The Commission’s proposal includes a one-off extension of the current rules until 31st December 2026, a clause rendering it legally impossible for the EU-UK Partnership Council to extend this period further and an additional funding of up to €3 billion (£2.6bn) to boost the EU’s battery manufacturing industry.

According to Britain’s Society of Motor Manufacturers and Traders (SMMT), the 10% tariff due to have started on 1st January 2024 would have cost UK citizens an extra £3,400 on average on EU-manufactured BEVs and a £3,600 rise on UK-made BEVs sold in Europe.

Maroš Šefčovič, Executive Vice-President for European Green deal, Interinstitutional Relations and Foresight said: “We want our European industry to be leaders in the green transition. By providing legal certainty on the applicable rules and unprecedented financial support to European producers of sustainable batteries, we will bolster the competitive edge of our industry, with a strong value chain for batteries and electric vehicles.

“This is a balanced solution that protects the EU’s interests.”

The deal will be put to the EU Council of Ministers next week for formal approval.

Article source: https://www.energylivenews.com/2023/12/07/eu-proposes-three-year-delay-on-ev-and-battery-trade-rules-with-uk/