The agreement potentially saves 4.3 billion euros in tariffs and preserves the production of 480,000 electric vehicles.
On December 21, the EU and UK agreed to extend the existing battery and electric vehicle (EV) rules of origin under the Trade and Cooperation Agreement (TCA). European manufacturers have positively received this move, as it bolsters the competitive edge of Europe’s rapidly expanding electric vehicle manufacturing sector. Sigrid de Vries, ACEA Director General, emphasized the importance of this deal, stating that the three-year extension for rules of origin brings crucial stability to Europe’s evolving electric vehicle battery supply chain. She highlighted that this decision demonstrates an understanding of the time required to develop new value chains and serves as a clear indication of the EU’s commitment to maintaining the competitiveness of its key industries. The deal is significant, as it potentially averts about 4.3 billion euros in tariff costs and safeguards the production of approximately 480,000 electric vehicles.
This agreement arrives at a critical time. A report released last week outlined significant challenges facing Europe’s EV manufacturing sector. The report stressed the need for comprehensive strategies to enhance domestic supply chains and bolster the EU’s EV industry, warning that the EU risks falling behind its Chinese and American counterparts. De Vries pointed out that, unlike these global players, the EU lacks a strong industrial strategy to advance electric vehicle manufacturing. While praising the recent decision, she urged for continued collaborative efforts to address the considerable task of establishing a mature EV battery supply chain in Europe.
De Vries further discussed the wider impact of the decision, noting that vehicle manufacturers are enthusiastic about spearheading Europe’s ecological shift and defining the trajectory of EV manufacturing across the continent for the collective benefit of Europeans. In light of the lawmakers’ favourable decision, she suggests that attention should be redirected towards developing an all-encompassing industrial strategy for the EU. Such a strategy would cover the full spectrum of the green value chain, encompassing aspects like research and development, mining, refining, manufacturing, the establishment of charging networks, energy supply management, the provision of purchase incentives, and the implementation of recycling processes.