Auto & Transportation

The representative of the European Union's electric vehicle industry stated that unless adjustments are made to the Brexit trade agreement, the EU's annual export of 30 billion euros worth of electric vehicles to the UK will face risks.

The Guardian reported that the world's three largest automakers have called on the British government to negotiate new rules. According to import and export data, according to the "principle of origin" clause in the agreement, electric vehicles transported between the UK and the EU must ensure that at least 45% of the components are purchased from the UK or the EU if they want to be exempt from paying a 10% tariff.

According to import and export data, the Association of European Automobile Manufacturers (ACEA), which represents 75% of the EU automotive industry, this could add over 3 billion euros in costs to the industry.

According to import and export data, in 2022, the value of electric vehicles exported by ACEA member countries to the UK was approximately 4.3 billion euros. However, with the recovery of the supply chain and the gradual phasing out of internal combustion engine vehicles, the market will flourish.

We expect total sales to reach around 25 billion to 30 billion euros by 2026, "said Jonathan O'Reildan, Director of International Trade at ACEA. He added that a 10% tariff would increase costs by up to 3 billion euros, which would be passed on to consumers, absorbed by the industry, or both.

This will mean that imported electric vehicles from the European Union, which many people believe are already excessively expensive, will have even higher prices next year.

Import and export data shows that last month, multinational automotive giant Stellantis, responsible for 14 brands such as Vauxhall and Jeep, warned that if the new "principle of origin" takes effect in January next year, it may have to close its business in the UK, thereby cutting thousands of job positions.

ACEA stated that a core issue is that people do not understand how much of the cost of electric vehicles comes from the extraction and processing of chemicals in batteries. Currently, China is a global supplier of "refined" active materials for batteries such as nickel, manganese, and cobalt oxide. Batteries are a high-value component of electric vehicles. For passenger cars, 35% to 45% of the cost is batteries. For heavy-duty trucks, this proportion is between 45% and 50%, "O'Reildan said.

ACEA has officially written to the European Commission, elaborating on cost issues and believing that Europe still needs three more years to expand battery supply and chemical refining, which is crucial for the entire process.

At present, the Brexit trade agreement only requires batteries to be assembled in Europe, but starting next year, components including cathode materials must also be produced in Europe (including the UK). ACEA stated that this is impossible and hopes to "give us a transitional mechanism for the next three years".

According to the import and export data, earlier this month, the Vice President of the European Commission, Maros Sevkovic, said that the United Kingdom could join the Pan European Mediterranean Agreement, which allows "parts manufactured in one country but assembled in another country" to be regarded as an export source.

This is an impossible thing. It may be a long-term solution, but not a solution for the next three years, "O'Reildan said. The Mediterranean agreement did not bypass the fact that China is a major supplier of refined chemicals.

A spokesperson for the European Union stated that the EU has "taken note" of ACEA's estimate. A diplomat stated that the European Commission has "only one voice" on this matter, and its work is "sticking to its own views" and "protecting the agreement". (Translated from: European Times)