Post-Brexit tariffs on cross EU-UK electrical vehicle imports still going ahead
- Reference: 1688724011
- News link: https://www.theregister.co.uk/2023/07/07/postbrexit_tariffs_on_electrical_vehicle/
- Source link:
The fresh rule starts from January 1, 2024, and means that British and European carmakers can't get that sweet zero-tariff rate while exporting to each other unless at least 45 percent of an electric vehicle's parts (by value) and 60 percent of its battery originate from either the UK or EU. If they don't hit the right ratio, a 10 percent tariff kicks in when exporting the vehicles from the UK to the EU, or vice-versa. The current threshold for the EV's parts, under the EU-UK Trade and Cooperation Agreement (TCA), is 40 percent. It is due to rise to 55 percent in 2027.
The high price of batteries and the fact that plenty of the components in a car are currently sourced from China and other parts of Asia has many in the automotive industry warning that the thresholds will strangle their businesses.
[1]
Speaking at the EU-UK Parliamentary Partnership Assembly [2]this week , Richard Szostak – known for his work as the so-called EU-Brexit [3]divorce mediator – pushed back against multiple British and Euro MPs asking for the rules to be delayed, saying that American subsidies dished out to its domestic makers under the Inflation Reduction Act were choking off the sector.
[4]
[5]
He said:
Since the adoption of the Inflation Reduction Act, investment in the battery sector in the EU has fallen off a cliff. I think it's more or less from 46 percent of global investment in the battery sector in the EU down to 1 percent...
The rules of origin mean that the battery in ... a pure electric vehicle... will have to be marked as originating either in the UK or in the EU to pass that test. If you were to loosen the rules, it means that that battery could be purchased elsewhere in the world, in the US or in China.
So when you say 'Loosen the rules of origin', you're saying that in addition to the pull factor, which means that investment in the battery sector is dropping in the EU, you'd be adding a push factor encouraging those batteries for European vehicles to be bought in China and the US.
He said the EU had to look at the other side "when judging its interest."
Among others, Chrysler/Peugeot maker Stellantis told a UK government inquiry into the supply of [6]batteries for EV manufacture [PDF] earlier this year: "If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close."
Stellantis added: "If we source batteries from mainland Europe and China, as currently planned, our UK Stellantis plants will also be at a competitive disadvantage due to the higher logistics costs that we will face to transport the batteries from mainland Europe to the UK."
[7]
Mike Hawes, chief executive of the UK's Society of Motor Manufacturers and Traders (SMMT) said in May: "The UK-EU TCA provided the basis for tariff-free trade and unlocked some pent-up investment. However, the rules of origin for batteries pose a significant challenge to manufacturers on both sides of the Channel, with the prospect of tariffs and price increases which discourage consumers from buying the very vehicles needed to achieve climate change goals."
[8]Semiconductor execs try to push UK government to do more for industry
[9]UK warned not to bother racing US, EU on EV subsidies
[10]EU parliament sets out two draft bills to forge ahead with Chips Act
[11]Europe wants more cities to use datacenter waste heating. How's that going?
[12]Never mind the Saudis: Here's a new OPEC for EV battery metals
Others have asked that the British government helps fend off the reaction to the American Chips Act with its own Chips act plan.
Andrew Buss, IDC senior research director in Europe, [13]previously told The Reg that: "The UK status outside of the EU single market means that potential tariffs and rules of origin requirements would make exporting the manufactured components more challenging and expensive. It is also not clear what tax incentives would be provided to make the long term investment worthwhile."
In June, ACEA, the Euro car manufacturer group, said in a [14]letter to the Commission that it also wants current TCA rules extended until the end of 2026, claiming "the payment of customs duties over that period would amount to €4.3 billion.
It added: "This risks significantly reducing the EU auto industry's market share of electric vehicles in the UK, potentially impacting the production of some 480,000 electric vehicles.
[15]
"While the restrictive rule of origin is ostensibly a tool to drive investment in European battery supply chains, its application will be counterproductive in the short term by creating a situation in which no player in the supply chain is able to comply."
Stellantis, meanwhile, said in its Parliamentary evidence that it believes "there will not be sufficient battery production supplies in the UK or in Europe by 2025 and 2030, despite the fact this is key to meet the Trade and Cooperation Agreement under the current Rules of Origin."
After Britishvolt's [16]collapse in January , the UK has almost no battery production to speak of, save for Nissan's plant in Sunderland, although EV battery specialist Envision has begun work on a new [17]Gigafactory in the [18]area . That plant is only slated to come online in 2025.
Analysts at Benchmark Minerals told us last year that they forecast European EV related cell demand to reach 1250 GWh by 2035, and a pipeline cell production capacity in Europe of 1155 GWh to 2035, across 30 plants.
"Not all of this pipeline capacity will make it to production, nor will it be dedicated 100 percent to supplying transportation end markets, finally considering average utilization rates this leaves a clear gap in regional self sufficiency in cell supply."
However, German automotive industry body the VDA appears to have hope that European governments will push for an extension on rules of origin in the TCA beyond January 1, 2024, telling us: "If there is the political will to adjust the rules of origin, then there will be a way."
"It is the turn of the federal government and it should make it clear to the EU Commission that there is a need for adjustment.
"We definitely see a willingness to talk within the federal government."
A spokesperson told us: "We are now confronted with the situation where the development of a fully integrated battery supply chain in Europe is not progressing fast enough to comply with the more restrictive rules of origin under the TCA with the UK." ®
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[1] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZKg2n28kPOtZripRgqr9FQAAAgI&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[2] https://multimedia.europarl.europa.eu/en/webstreaming/eu-uk-parliamentary-partnership-assembly_20230704-1000-DELEGATION-D-UK
[3] https://www.politico.eu/article/meet-richard-szostak-eu-new-brexit-man/
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZKg2n28kPOtZripRgqr9FQAAAgI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZKg2n28kPOtZripRgqr9FQAAAgI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://committees.parliament.uk/writtenevidence/118270/pdf/
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZKg2n28kPOtZripRgqr9FQAAAgI&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2023/07/03/industry_execs_say_uk_gov/
[9] https://www.theregister.com/2023/06/05/uk_ev_subsidies/
[10] https://www.theregister.com/2023/02/16/eu_chips_act_bills/
[11] https://www.theregister.com/2023/04/20/europe_waste_datacenter_heating/
[12] https://www.theregister.com/2022/10/31/car_battery_cartel_proposal/
[13] https://www.theregister.com/2023/05/19/uk_1b_semiconductor_strategy/
[14] https://www.acea.auto/news/acea-letter-to-the-european-commission-on-battery-rules-of-origin/
[15] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/front&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZKg2n28kPOtZripRgqr9FQAAAgI&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[16] https://www.theregister.com/2023/01/18/electric_vehicle_batteries_could_help/
[17] https://www.electrive.com/2022/12/12/uk-envision-aesc-lays-foundation-for-sunderland-gigafactory/
[18] https://www.electrive.com/2022/12/12/uk-envision-aesc-lays-foundation-for-sunderland-gigafactory/
[19] https://whitepapers.theregister.com/
Re: Fuck business
Ah, but look what we've gained. Instead of faceless EU bureaucrats telling us what to do we've got Rishi Sunak, Jacob Rees-Mogg and quite possibly Boris Johnson again looking after our interests. What could possibly go wrong?
Re: Fuck business
Vote Leave to free the UK from all the EU regulations, they said... well, whether you like it or not, we're still affected by EU regulations directly or indirectly.
Re: Fuck business
Just to extend that slightly: We're still affected by EU regulations directly or indirectly, and now we have no control at all over those regulations. This situation was inevitable, entirely predictable, and does not benefit the UK at all.
Re: Fuck business
Just to extend that slightly: We're still affected by EU regulations directly or indirectly, and now we have no control at all over those regulations. This situation was inevitable, entirely predictable, and does not benefit the UK at all.
Not only was it predictable; it was predicted -- loudly and repeatedly in almost those exact words.
Re: Fuck business
And a significant number of the EU regulations were a result of UK interests when we worked with the EU to set things up. I see the change from the EU as just like sitting on a toilet reading a newspaper, and no toilet paper ... a return to the early days when I was a kid and the UK was just the UK. After we joined the EU originally we upgraded the family cottage and removed the Thunderbox from the back-yard. But looking at today's inflation I think I might need to return to newspaper now.
Re: Fuck business
Some numptys still don't understand that trade relies on agreed regulations.
No matter how much sovereignty you have eaten.
Re: Fuck business
If anything illustrates the delusion of equality of sovereignty, this is it.
In theory this is a zero-sum gain: if the EU puts tariffs on UK vehicles, then the UK reciprocates: honour satisfied.
In practice, if the EU puts tariffs on UK vehicles, UK electric vehicle manufacturing collapses as the home market is not of a viable scale and the UK has to buy vehicles from the EU anyway.
At least Cuba got cut off at a time when there were some classic models around. Can't see 50-year-old Micras having quite the same nostalgic allure.
Re: Fuck business
Agree, except I love the nostalgia value of my 25 yr old Micra now. In another 25 when electric Johnny Cabs roam the streets it will be quite the sight.
Re: Fuck business
Everything. And then we vote them out.
Good, isn't it?
Be proud
'We are all gonna fry' green madness is so important that the solution of EV's must be made difficult to source and more expensive. Surely if there is such concern then it doesnt matter where the product comes from we need to allow it to be available?
Of course from my perspective its idiots acting like idiots over the latest religion so I can laugh at the stupidity of it all.
The EV cult
Has some strange tenets.
"there will not be sufficient battery production supplies in the UK or in Europe by 2025 and 2030"
Which won't really be a problem given that there will not be enough nuclear energy generation to supply them all anyway.
Anyone who believes that the tens of millions of ICEs rolling around today will all be replaced by EVs in the next six and a half years needs to come and see this bridge I have for sale . . .
Not to mentiont that the overall green credentials of EVs are still to be demonstrated.
Are those batteries really 100% recyclable ?
And how many more are going to die in the cobalt mines just to make another hipster happy ?
There are about 95% recyclable or they are used as battery storage in places like the Johan Cruijff Arena in Amsterdam
Re: Buy a pasty and visit the Cornish lithium mines!
And how many more are going to die in the cobalt mines just to make another hipster happy ?
Greens don't care about that. Out of site, out of mind. They pay premiums for artisanal bread and beer, and artisanal mining's the same, isn't it? Lovingly crafted by artisans working in a sustainable environment! Ok, so it really means effectively kids and slave labor crawling into holes that frequently collapse, but it's a small sacrifice to save the planet. Especially when it's other people making the sacrifice and leaving massive mines and pollution in places like DRC that are easily visible from space.
But
.. and 60 percent of its battery originate from either the UK or EU. If they don't hit the right ratio, a 10 percent tariff kicks in when exporting the vehicles from the UK to the EU, or vice-versa.
I'm sure there are weasel-words around this so 'orginate' means 'assembled'. I'm also fairly certain that neither the UK nor the EU has much in the way of lithium extraction, nor much of any of the other materials that go into battery packs. Then there's also a fair bit of plastic, but that'll be biopolymers after the petroleum industry is shut down.
And then there'll be a 21st Century 'gas' crisis because there won't be enough electricity to charge all the EVs people are being forced to buy. See also-
https://notalotofpeopleknowthat.wordpress.com/2023/07/05/as-predicted-wind-industry-blackmails-the-uk-demands-yet-more-subsidies/
The industry is claiming that unforeseen rising costs now necessitate and justify three actions:
1) A vast increase in the budget for the fifth auction (AR5) of Contracts for Difference subsidies, with an increase of two and half times the current levels for non-floating offshore wind alone;
2) Special new targets and thus market shares for floating offshore wind, one of the most expensive of all forms of generation, and, most importantly of all,
3) a revision to the auction rules so that the winners are not determined by lowest bids but by an administrative decision that weights bids according to their “value” in contributing towards the Net Zero targets.
I thought the 'renewables' scumbags had been telling us that the cost of 'renewables' was falling, and it was now the cheapest form of generation by far? Surely if they hadn't been lying all the time, we should be reducing subsidies, not increasing them 2.5x?
Reality
According to the US Department of Transportation, the average age of autos on US roads is about 12 years. That's the average . People don't get rid of perfectly good cars due to marketing nor rebates. That's why any claims about the fleet changing to EV's in half a dozen years or so are gibberish.
https://www.bts.gov/content/average-age-automobiles-and-trucks-operation-united-states
Re: Reality
In the UK, it is 10 years old, and rising. 2 years ago it was 8.4 years old.
People who buy new cars tend to replace them after 3 years, and that is what people think about when they make statements like that. But of course, they don't send their 3 year old cars to the scrapyard, they sell them on the second hand market, and someone else who doesn't believe in buying brand new cars buys it.
I bought my last car brand new. It is now a little over 10 years old, and I will keep it until the cost of getting it through its MOT becomes too high. At the last MOT, I replaced the tyres before taking it there, though it would have technically passed, and it went through with no problems. I also asked them to fix my air conditioning which isn't an MOT requirement but something I wanted done anyway.
This is why UK.gov should have been working much, much harder on trade deals with the EU.
Unfortunately Johnson and his cronies had a different agenda. The referendum was to leave the EU, not necessarily the single market. Johnson et al took the decision to leave everything they could (remember they claimed that the referendum meant that voters wanted to leave the ECHR even though that wasn't mentioned on the referendum question at all). They then spent far too much time trying to prove that leaving the single market was the right thing to do and in order to do this they expended far too much effort try on negotiating poxy little trade deals with far flung countries for tiny little markets.
We all know that right wing governments have to have an enemy, multiple enemies for preference. We also know that Johnson saw himself as the new Curchill. Put those things together and it seems pretty clear that Johnson thought he could maintain his popularity and this hold onto power by creating as much conflict as possible with the EU and of course by signing (but not reading) almost pointless trade deals with any country that would negotiate one.
Johnson saw BREXIT as a success because it got the Tories reelected, so BREXIT was "dumb" but seen as "done" - the major benefit for Europe of BREXIT is that it's pretty much eliminated every other country doing it now that they have seen what's happening.
We also know that Johnson saw himself as the new Curchill.
What bemuses me is that he could have achieved it by pushing for a tiered EU, which to me is where it always needed to be heading, and now seems to be heading, albeit slower than snail's pace.
He could have been the one hailed for having "got the EU sorted" but instead nailed his flag to the mast of a small minority of nationalistic and selfish bigots. His big mistake was to aim to win through division rather than through uniting.
Ironically his failure was lack of ambition, failing to understand how great he could have been.
I don't think it is clear here, but, if you produce a car in the UK with a battery made in the EU, you have to pay the 10% import tax to send the completed car back to the EU, but if you put a Brittish battery in it, you don't.
The same works in reverse.
Fuck business
They really meant it.