According to the CEO of Ford, Britain should continue adhering to EU auto laws to prevent escalating consumer costs. Tim Slatter’s remarks come as automakers get ready for the first significant examination of Britain’s post-Brexit trade agreement with the EU. Some pro-Brexit activists want the UK to take further steps to differentiate itself from the EU and concentrate on markets outside of Europe.

However, the chairman of Ford indicated that British automakers think that Europe holds the key to their future.

Tim Slatter stated, “Because Europe is where we build and sell the majority of our vehicles, it’s really important that we maintain really good alignment to the European [regulatory environment].” Tim Slatter was speaking on the eve of the International Automotive Summit in London.

“Otherwise, what we’re going to see is a lot of extra cost come into the cost of developing vehicles and producing vehicles and that can’t be a good thing for customers.”

A review of the UK/EU commerce and Cooperation Agreement (TCA), which regulates commerce between the UK and the EU, is scheduled for 2025–2026. Under unique agreements, Northern Ireland is more firmly bonded to the EU.

The TCA agreement has the benefit of removing all tariffs and restrictions from UK exports to the EU. UK automakers must adhere to EU laws in order to access the single market.

Britain has the freedom to disregard EU rules. However, it will discover that access to the EU market is constrained if it does so.

“The trade and cooperation agreement remains the critical thing – frictionless trade, tariff free trade. It’s very important that Great Britain maintains good regulatory alignment with the European Union. There are sort of three big regulatory environments for automotive in the world. There’s the North American one, the European one and the Japanese one. And it’s really important that we maintain really good alignment to the to the European one, because that’s where we build and sell most of our vehicles,” Slatter told BBC.

The “rules of origin” are one part of the TCA that the auto industry is extremely worried about and which is set to take effect in January.

Auto sales from the UK to the EU and vice versa beginning in January 2024 may be subject to a 10% levy. That will occur if more than 45% of any vehicle’s worth or 60% of its battery is composed of components made outside the EU and the UK, respectively, for electric cars built in the UK or the EU.

The European Commission created the regulation to encourage automakers in the UK and the EU to increase the production of electric vehicle components in Europe.

Currently, South Korea and China are the two major suppliers to the European auto sector.

The European Commission has been lobbied by UK and EU automakers to extend the deadline to 2027. Selling into each other’s marketplaces will hurt both parties.

However, the duty will not apply to EU nations that trade with one another. This indicates that if the UK had stayed in the EU, the tariff would not have been imposed.

According to Tim Slatter, automakers will be unable to dodge the 10% levy in January, which would result in a penalty for ecologically efficient cars but not for carbon-emitting ones.

“We’ll have this very unusual situation where the technology that we’re trying to promote and government is trying to promote to help decarbonise our economy will be taxed and the traditional technology won’t be taxed. And that’s clearly not what was intended when the when this rules of origin regulation was put in place,” said Slatter.

A “double whammy” will result from it, he continued. Consumer car prices would go up, industry costs would go up, and the levy would defeat two important goals: expanding the production of battery electric vehicles and guaranteeing that all automobiles are zero emission vehicles.

The schedule that was established, according to Slatter, did not account for the difficulty of securing local manufacture, particularly with regard to the battery inside the battery cell.

“The cathode active material, which makes up about 50% of the value of the cell, is not yet produced in sufficient quantities, either in the UK or in Europe, to support the industry. And that’s one of the key things which needs to be changed so that the industry can make this meet this rules of origin requirement,” he said.

“The Business and Trade Secretary has raised the rules of origin issues with her EU counterpart and is determined to ensure the UK remains one of the best locations in the world for automotive manufacturing, especially as we transition to electric vehicles,” a government source told the BBC:

(Adapted from BBC.com)

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