© Reuters. FILE PHOTO: European flags fly outside the European Commission headquarters in Brussels, Belgium September 20, 2023. REUTERS/Yves Herman/File Photo
By Philip Blenkinsop
BRUSSELS (Reuters) -The European Commission proposed on Wednesday delaying by three years a tightening of local content rules that would have led to import tariffs on many electric vehicles (EVs) traded between the European Union and Britain from the start of 2024.
The Commission also said it was setting aside an additional 3 billion euros ($3.24 billion) to boost the EU’s battery manufacturing industry, a move designed to boost local content and reduce reliance on batteries and materials from China.
The post-Brexit Trade and Cooperation Agreement (TCA) says that, to qualify for zero tariffs, at least 55% of the value of EVs need to be from the European Union or Britain, with values of 65% for battery cells and modules and 70% for battery packs.
However, it contains two transition periods, the first with EVs requiring 40% local content and battery packs and components 30%, the second for 2024-2026 at 45% for EVs, 50% for battery cells and modules and 60% for battery packs.
Import tariffs of 10% apply for EVs falling short of those requirements.
The proposal is to extend the first transition period for three years to 2027, when the full local content requirements of the TCA will apply. The second transition period will not apply.
European Commission Vice President Maros Sefcovic, who oversees EU relations with Britain, said that Russia’s invasion of Ukraine and soaring energy prices, along with support schemes of rivals, meant that EU battery production had not scaled up as planned.
Given batteries represent 30-40% of a car’s value and that most are from China, many carmakers argued they would have struggled to meet the content requirements of the second transition period.
($1 = 0.9267 euros)
