European Laws will Cost European Manufacturers Billions and May Close a Few Down

The inexorable rise of the EV seems to be causing great pains in Europe. New rules to be implemented, designed to ensure the EU-Produced EVs are made from locally manufactured and locally sourced parts, will come into force in January 2024.

The only trouble is manufacturers say they are not ready. On top of that, an industry body claims that the new rules will ultimately cost the industry some USD4.71 billion over the next three years. All of which could easily reduce factory output by as much as 480,000, well at least according to the European Automobile Manufacturers Association (ACEA).

The problem is with the new ‘rules-of-origin’, which applies to shipments of cars across the English Channel and states that the batteries must be manufactured either in the UK or in the EU. Any car that does not meet that criteria will be hit by a 10% tariff. The rule was designed to stop the industry from cheap imports, but the European Battery industry has failed to ramp up production sufficiently to meet demand.

The rules of course will drive prices up at the very time that European cars are already fighting stiff competition from cheap Chinese-manufactured vehicles. Imports this year from China are up 112% alone in the first seven months of the year. Talks are ongoing to push the deal back, but it is all wrapped up in the Brexit agreement and it has proven difficult to reopen or renegotiate anything to do with that in the past.