Automotive companies Ford and Stellantis have warned that changes will be required to the trading rules with the European Union if their UK manufacturing facilities are to continue being economically viable.
The problem arises from the rules of origin that formed part of the EU–UK Trade and Cooperation Agreement (TCA) that was agreed as the UK left the EU. This allows UK carmakers to export electric vehicles (EVs) tariff-free to the EU, and vice versa, if 45% of their value derives from the UK or EU. This is proving to be a difficult hurdle to clear due to limited battery production in both the UK and EU, meaning up to half of an EV’s value needs to be imported from further afield just in battery packs.
Ford said in a statement that it would be in the interests of both the UK and EU to delay implementing the trading rules:
“…to 2027, to allow time for the battery supply chain to develop in Europe and to meet EV demand. Tariffs will hit both UK- and EU-based manufacturers, so it is vital that the UK and EU come to the table to agree a solution.”
The UK is set to phase out sales on traditional internal combustion vehicles by 2030, with lubricant makers like Castrol already producing specialised coolant, grease and lubricant products. Ford say that bringing the new rules in next year risks undermining the switch to EV production, especially as traditional vehicles will continue to move free from tariffs.