On Wednesday 6 December, the European Commission proposed to the Council of the European Union a specific one-off three-year extension, until 31 December 2026, of the current rules of origin applicable to electric vehicles and batteries under the Trade and Cooperation Agreement (TCA) between the EU and the United Kingdom.
This decision “means that we avoid an intermediate phase of slightly stricter rules of origin, which would have been applied from 2024 to the end of 2026. This removes the threat of customs duties on the export of electric vehicles from the EU to the UK and vice versa from 1 January 2024”, explained Executive Vice-President Maroš Šefčovič to the media.
The TCA’s rules of origin for electric vehicles and batteries were developed in 2020 to encourage investment in EU battery production capacity.
According to the Commission, unforeseen circumstances such as Russia’s aggression against Ukraine, the impact of Covid-19 on supply chains and increased competition from new international subsidy schemes “have created a situation in which the expansion of the European battery ecosystem has been slower than initially anticipated. As a result, many concerns have been expressed by the European automotive, battery and chemical industries – which would have faced tariffs of up to 10% on 1 January next year for electric vehicles with batteries from third countries”, Šefčovič explained.
The proposal contains a clause making it legally impossible for the EU-UK Partnership Council to extend this period further, which will make it possible to “lock in” the rules of origin in force from 2027. This proposal has no impact on the TCA’s more general rules of origin, which will apply from 2027, as planned, the Commission points out.
At the same time, from 2024 onwards, the Commission will grant funding of up to €3 billion over three years to European manufacturers of the most sustainable batteries, via a dedicated instrument under the Innovation Fund. See the proposal: https://aeur.eu/f/9zv and the annex: https://aeur.eu/f/9zw (Original version in French by Camille-Cerise Gessant)