German car makers lobby to keep tariff-free access to UK

German automakers are lobbying the European Commission to delay post-Brexit rules that could severely hurt Britain’s struggling auto industry.

Electric vehicles transported between the UK and the EU from next year will have to source 45% of their parts from within both regions under post-Brexit rules of origin, or face 10% tariffs. will be imposed. trade agreements.

With much of the battery still sourced from Asia, EVs are likely to face tariffs for violating the new standards, and Vauxhall and Peugeot owner Sterantis said on Tuesday that it will continue to operate its UK factory in the port of Ellesmere. It warned it could be forced to close.

Germany’s automotive industry lobby group VDA said on Wednesday that the European battery industry was not developing fast enough and that the tariffs “would create a significant competitive disadvantage for the electric vehicle industry in Europe.” “We have to adjust the deal urgently,” he said. Asian competitors in the very important UK market. ”

The intervention is a belated fulfillment of Brexit advocates’ hopes that German automakers will intervene in EU-British negotiations to protect their sales.

But it comes as UK industry faces major post-Brexit headwinds as it transitions to electricity. Domestic battery maker British Volt filed for bankruptcy this year, and Jaguar Land Rover owner Tata Motors is asking for a large amount of government aid to keep its large battery factory in the UK instead of the EU.

Prime Minister Jeremy Hunt said on Wednesday that he would “focus on this area” when it comes to new UK factories, indicating that ministers remain hopeful that a deal with Tata will be reached.

“Everyone is trying to develop a supply of EV batteries, so we need to secure that supply here in the UK,” Hunt said. The closer to the factory that makes the rest of the car, the better. ”

“Negotiations are ongoing” with Tata, officials briefed on the talks said, adding: We want to deliver on this massive investment in the UK. ”

Another official said Prime Minister Rishi Sunak and Energy Secretary Grant Shaps are personally leading talks with Tata. “It could still spread to the UK. They’ve done a good job,” said the official.

In the UK Parliament, Labor’s shadow business secretary Jonathan Reynolds said the government needed to “wake up, get behind the wheel and take control of the situation before it’s too late”.

He added: “This is a blindingly clear statement that a lack of battery manufacturing capacity in the UK combined with changes in the rules of origin was waiting for a car accident to happen.”

Downing Street said ministers were in talks with Brussels about extending the 2024 “cliff edge” tariffs on automakers. “We have raised this issue with the European Commission. We are aware that this is a problem for them as well as for us.

But an EU official said Brussels was “unwilling to change its rules of origin”. “Stakeholders have been given time to adapt and are encouraged to take advantage of the established transition times,” the official added.

Nevertheless, the EU is facing growing backlash from domestic and international automakers. The Association of European Automobile Manufacturers (Acea) said: “Establishing a fully integrated battery supply chain in Europe is simply difficult, so the European Commission has asked the European Commission to extend the phase-in period for the rules of origin for batteries beyond January 2024. I am requesting,” he said. They don’t take off fast enough to comply with the more restrictive rules. ”

Jaguar Land Rover called the timing “unrealistic and counterproductive”.

Ford, which makes electric cars in Germany and parts in the UK, has called for a delay to 2027, saying that if implemented as planned, the requirement would be “a nonsensical cost to customers who want to go green.” ‘ will be added.

“The tariffs will hit both UK and EU-based manufacturers, so it is important that the UK and EU come to the table to agree a solution,” he added.

The UK imports more electric cars from Europe than it sells on the market, but UK automakers have a much higher exposure to the EU than their German and French rivals have to the UK. have exposure.