EU Rules on Electric Cars Could Cost Carmakers Billions

New Brexit trade rules covering electric vehicles could cost European auto manufacturers £3.75 billion ($4.58 billion) over the next three years, an industry body has said.

BBC News reports that the rules under the U.K.-EU Trade and Cooperation Agreement are meant to ensure EU-produced electric cars are largely made from locally sourced parts. But manufacturers both in the U.K. and in Europe say they are not ready.

The European Automobile Manufacturers Association (ACEA) also warned the measures could reduce output from EU factories by 480,000 vehicles, and that costs would be passed on to customers.

The issue is the so-called "rules of origin," designed to protect the European industry from cheap imports, which come into force in January 2024. They apply to shipments of cars from mainland Europe to the U.K., under the terms of the Brexit deal, which require that electric vehicles will need to have batteries produced in either the U.K. or the EU.

Cars that do not meet the criteria will face 10% tariffs when transported from the U.K. to the EU, or vice versa.Because battery production in Europe has not ramped up as quickly as expected, car-makers are struggling to meet the new criteria.

The U.K. is by far their largest export market for European car-makers, with 1.2 million vehicles arriving at U.K. ports last year. Likewise more cars built in the U.K. are transported to the EU than any other region.

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• Source: https://www.supplychainbrain.com/articles/38162-eu-rules-on-electric-cars-could-cost-carmakers-billions