UK EV industry under threat from ‘Made in Europe’ rules

The UK’s car industry has urged European leaders to rethink a new policy which could exclude British-made cars and components from major incentive programmes.

The Society of Motor Manufacturers (SMMT) has warned that, as it stands, the EU’s proposed Industrial Accelerator Act (IAA) could cause major damage to both the UK and EU’s economies, and urged a rethink on the Made in Europe policy.

The IAA is intended to boost Europe’s car manufacturing sector in the face of massive competition from low-cost Chinese imports.

Under the current Made in Europe plan, cars built in Europe and using European-made components such as batteries and motors will be eligible for major incentives such as state-supported grants, tax incentives and additional CO2 trading credits. However, vehicles and parts made in the UK will not qualify.

The SMMT argues this puts the UK’s car industry at a major disadvantage “impacting production volumes which, in turn, would severely constrain EU supply chain demand and mean reduced choice and higher prices for consumers”.

The UK remains the EU’s largest export market for passenger cars – and vice versa. Nine out of 10 cars eligible for the Electric Car Grant are EU-built and 61% of all EVs sold in the UK are imported from European factories.

The SMMT says that despite the upheaval caused by Brexit, EU-UK trade in battery electric vehicles (BEVs) has “flourished” thanks to the current tariff-free conditions of the EU-UK Trade and Cooperation Agreement.

As both sides of the relationship shift towards an all-electric future, it argues putting obstacles in the way of trade would harm the transition.

Mike Hawes, SMMT chief executive, said: “Brexit put the resilience of our shared industry under enormous stress but manufacturers have overcome those challenges to grow our trade in electrified vehicles alone to record levels.

“If the Industrial Accelerator Act proceeds as drafted, it threatens to reverse progress, undermining the Trade and Cooperation Agreement all sides worked so hard to deliver and jeopardise our respective competitiveness, damaging jobs, investment and innovation.

“Instead of weakening our partnership, we must seize the opportunity to deepen collaboration and unlock the full promise of the TCA.”

Earlier this year Nissan reportedly warned that the IAA could put the long-term future of its Sunderland plant at risk. The site currently builds the Leaf EV and is due to begin production of the new Juke EV later this year. However, sources said that exclusion from the Made in Europe incentives would threaten the viability of building the cars in the UK.