The impending Brexit trade rules concerning electric vehicles are likely to inflict a heavy financial burden of £3.75bn on the European manufacturers within the coming three years. The said regulations are geared toward ensuring that the significant majority of electric cars produced within the EU incorporate locally sourced parts.
However, it appears that industry players on both ends of the Channel are not amply prepared for this imminent shift. The European Automobile Manufacturers Association (ACEA) has also sounded warning bells, projecting that these measures may reduce the overall EU factory output by approximately 480,000 vehicles. Furthermore, they predict that these costs would not be absorbed by corporations, but instead passed onto the consumer.
The root of this issue lies in the so-called “rules of origin” poised to come into effect this January. Acting under the auspices of the UK-EU Trade and Cooperation Agreement, aka the Brexit deal, they pertain to cars transported across the Channel. Essentially, these regulations require electric vehicles to have their batteries produced either within the UK or the EU, and cars not meeting these standards will be hit with a 10% tariff in either direction.
Originally intended to shield the European industry from low-cost imports, these rules are causing unforeseen strife, given how battery production in Europe has failed to scale as rapidly as expected. The ACEA has advocated for a three-year delay in the implementation of these new rules and appeals to the European Commission for intervention.
Responding to the situation, Renault’s chief executive, Luca de Meo, who also serves as ACEA’s president, stated, “Increasing European electric vehicle prices at a critical juncture when we’re vying for market share amidst stiff global competition is not the best course. This would essentially be a gift to global manufacturers.”
For these regulations to be deferred, an agreement must be brokered between the UK and the EU. While the UK Business Secretary, Kemi Badenoch expressed optimism about such a deal, the EU’s internal market commissioner, Thierry Breton, was less forthcoming, asserting that it would be inappropriate to renegotiate the Brexit deal for the automotive industry’s sake.
As this drama unfolds, it’s an insightful reminder of how global events and economic policies can shape cornerstones of life in unexpected ways. And with businesses and industries trying to thrive in this constantly changing environment, it is no surprise that novel interests and pastimes are emerging to alleviate the stress for individuals.
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