Nearly all European Union member states are seeking to delay the implementation of a new Brexit regulation that could negatively impact the automotive industry. According to sources within the negotiating parties, as reported by Bloomberg, the majority of EU countries favor postponing the enforcement of this rule. The only exception is France, which is advocating for the rule to be upheld.
This regulation, scheduled to take effect on January 1, 2024, imposes a 10% tax on products where more than 45% of their value is generated outside the exporting country. Originally devised during the Brexit negotiations to prevent the disguised transit of goods from other nations, it now presents a potential problem.
The issue arises because electric vehicles, produced both in the UK and the EU, still heavily rely on imports from the Far East for their battery packs. These battery packs constitute over 40% of the car’s total value. Consequently, British cars in the EU and European cars in the UK could become significantly more expensive. Given the fierce competition from Chinese automakers, this outcome is deemed highly undesirable, not only by car manufacturers but also by national governments.
As a solution, the proposal is to postpone the implementation of this regulation for three years, allowing the EU to establish its own battery industry, which is currently in development.
While France’s opposition to the delay has been mentioned in reports, it has not been officially confirmed. The speculated reason is that a delay might also benefit the UK, and France does not want to give the impression that countries benefit from leaving the EU, as suggested by an anonymous EU negotiator cited by Bloomberg.
