Rules of Origin Trade Agreement could kill UK car manufacturing

Three major car manufacturers building cars in the UK, Ford, Jaguar Land Rover and Stellantis (Vauxhall), are urging the UK and EU to return to the negotiating table to reconsider a part of the Brexit deal which currently requires 40% of electric vehicle parts to be sourced in the UK or the EU in order for it to qualify for tariff-free trade.

The UK-EU Trade and Cooperation Agreement (TCA) is set to increase the “rules of origin” to 45% from the start of 2024.

These rules affect all manufacturers in Europe and is predicted to affect manufacturers on both sides, but the pain may be felt for longer for manufacturers of electric vehicles in the UK as there is no significant battery manufacturer in the UK and it will be several years before the UK has it’s own supply of batteries. Europe has several battery manufacturers currently already manufacturing batteries or are in the planning.

For the UK at least this means that batteries will need to be imported, most likely from Asia. Without a change in the agreement the tariff to export electric cars from the UK to Europe will rise to 10%, making car manufacture in the UK unviable.

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