Brexit rules: VDA President Hildegard Müller on rules of origin for e-cars

"In the run-up to the conclusion of the TCA, the VDA expressly pointed out in Germany and the EU that the tightened rules of origin for hybrid and fully electric vehicles must actually be achievable in practice and the necessary infrastructure has to be created in the EU and the United Kingdom. It is now urgently necessary to make adjustments within the framework of the TCA.

The rules of origin for battery-powered vehicles in the Trade and Cooperation Agreement (TCA) should be quickly adapted to the real situation and to developments of European battery manufacturing capacities. As a first step, the current rules of origin must therefore be extended until the end of 2026.

Unfortunately, it is foreseeable that, in particular, the necessary localization of active cathode material within the EU or the United Kingdom will not be completed by the end of 2023. Therefore there is a risk of customs payments both when exporting e-cars to the UK and when exporting them out of the UK. This will be not only a considerable competitive disadvantage for the European automotive industry compared to its Asian competitors in the very important UK market. It would also pose a risk to the ramp-up of e-mobility both in the United Kingdom and in the EU. The entire EU supply chain, also including EU (battery) suppliers, will be negatively affected if the rules of origin come into force unchanged in 2024. Such a negative scenario for European competitiveness must be avoided, as otherwise the EU would also fall behind as a location for battery cell production. This would slow down the transformation."