EU seeks to push EV trade rules

The European Union has proposed a three-year delay to the implementation of rules that would impose import tariffs on many electric vehicles (EVs) traded with Britain. The European Commission suggested extending the first transition period until 2027, during which EVs would require 40% local content and battery packs and components 30%.

The original requirement under the post-Brexit Trade and Cooperation Agreement (TCA) for zero tariffs is at least 55% of the value of EVs to be from the European Union or Britain. The Commission’s move is aimed at supporting the EU’s battery manufacturing industry and reducing reliance on China. An additional 3 billion euros ($3.24 billion) is set aside to boost battery manufacturing.

The European Automotive Manufacturers’ Association (ACEA) welcomed the proposal, which could avoid tariffs estimated at 4.3 billion euros for EU vehicle makers in 2024. The extension is seen as a response to challenges such as Russia’s invasion of Ukraine, rising energy prices, and support schemes from rivals slowing down the EU battery production scale-up.

Battery packs represent 30-40% of a car’s value, and the proposed extension acknowledges the challenges carmakers face in meeting local content requirements. Swedish battery producer Northvolt praised the move as a “strong, strategic” step that could give Europe a competitive edge in sustainable, circular batteries. The proposal will be presented to EU countries, with support expected, before being presented to Britain, which also backs the extension.