The European Commission has put forth a proposal for a specific one-time extension of the existing origin rules for EVs and batteries within the framework of the Trade and Cooperation Agreement between the European Union and the United Kingdom.
The proposed extension, if approved by the Council, would be applicable until December 31, 2026.
The origin rules were initially conceived in 2020 to incentivize investments in the EU’s battery manufacturing capacity.
However, unforeseen circumstances, including Russia’s aggression against Ukraine, the disruptions caused by COVID-19 in supply chains, and increased competition from new international subsidy regulations, have led to a slower-than-expected expansion of the European battery ecosystem.
Given these challenges and concerns within the European automotive, battery, and chemical industries, the Commission has adopted its proposal for a Council decision today.
Simultaneously, the Commission reaffirms its political commitment and strategic support for furthering battery production in the EU.
To achieve this, the Commission will allocate funds of up to €3 billion for three years to the most sustainable European battery manufacturers.
This initiative aims to have significant ripple effects across the entire European battery value chain, particularly in the upstream segment, supporting the assembly of EVs in Europe.
Key Points of the Proposal:
- One-Time Extension: The Commission proposes a one-time extension of the current regulations until December 31, 2026.
- Non-Extension Clause: A clause is included that legally prohibits the EU-UK Partnership Council from further extending this period, effectively solidifying the origin rules scheduled to take effect from 2027.
- Financial Incentives for the EU Battery Industry: As part of its recent efforts to strengthen the industrial dimension of the European Green Deal, the Commission will establish a dedicated instrument for the battery value chain within the Innovation Fund.
This aims to provide faster and more cost-effective support for the production of the most sustainable batteries in member states.
Member states will be encouraged to financially participate in proposal submissions, ensuring a unified approach to avoiding market fragmentation and achieving administrative cost savings.
The proposal will now undergo discussions in the Council.
Upon the Council’s decision, the EU’s position in the Partnership Council, the highest decision-making body of the Trade and Cooperation Agreement, will be determined.
The Trade and Cooperation Agreement outlines the rules for trade between the European Union and the United Kingdom, including origin rules that determine how a product can be considered an origin product of the EU or the United Kingdom.
The preference scheme introduced with the agreement can only be applied to products originating from a contracting party of the Trade and Cooperation Agreement between the EU and the United Kingdom.