The European Union could soon pass a new rule that could massively disadvantage the UK’s car industry in a horrifying post-Brexit move. New ‘Made in Europe’ legislation will mandate that some strategic products, including vehicles, must contain a minimum number of EU-made components to qualify for public subsidies.
Under the new Industrial Accelerator Act rules, EVs will be required to ensure 70% of components are made in the EU to qualify for cash grants or tax exemptions. It is believed the new rules are in place mostly to protect European companies from the threat of brand-new Chinese manufacturers.
However, the rule would effectively cut off the UK post-Brexit as it is no longer a member of the EU. In their latest ZEV review report, the Department for Transport stressed that the automotive industry has already raised concerns with the UK government about the impact the new ‘Made in Europe’ proposals could have on the sector.
The DfT added: “Lower than anticipated ZEV demand sits alongside wider factors affecting the UK automotive sector, including comparatively high UK energy and labour costs, tariffs and trade barriers, supply chain risks, and uncertainty around future regulatory developments.
“This includes concerns about the EU’s proposed ‘Made in Europe’ measures which, although not yet legislated, could have a detrimental impact on the UK automotive sector if the UK were excluded. Together, these factors have created a more challenging operating environment, affecting competitiveness and confidence across the industry.”
Jaguar Land Rover has previously warned that the new proposals would likely increase costs for manufacturers. Toyota has even warned that the new rules could “undermine future investment, jobs and technology transfer.”
The Society of Motor Manufacturers and Traders (SMMT) has also warned that the rules would effectively shut UK assembled vehicles out of European markets. He warned it was a problem for the UK, but also a threat to European industrial competitiveness.
Mike added: “We are the EU’s biggest export car and parts market, just as they are ours.”
The DfT said that they had started engagement with the EU over the issue, but officials are actively seeking opinions from stakeholders about how to respond next.
The DfT said: “The UK government is committed to its international commitments under the World Trade Organisation and relevant bilateral trade agreements, and is working with the EU on its proposals to ensure UK industry is not unfairly disadvantaged. To help address the concerns raised, this consultation is inviting views on potential avenues for responding to the EU’s Industrial Accelerator Act proposal.”