Reprieve for UK carmakers over electric vehicles and batteries

Reprieve for UK carmakers over electric vehicles and batteries

The proposal from the EU Commission to extend the current rules of origin for electric vehicles and batteries until 31 December 2026 will be a huge relief to UK car manufacturers, according to accountancy and business advisory firm BDO. 

Matthew Clark, international trade partner at BDO said:

“The automotive sector in the UK has faced numerous challenges in recent years. Brexit, Covid and the resulting supply chain shocks and interest rate rises have made life very difficult for the UK’s carmakers, but there has been a slew of good news in recent weeks. 

“The confirmation at the Autumn Statement that full expensing would be made permanent has been warmly welcomed by the sector and should provide automotive businesses with more certainty to enable them to make long term investment decisions.  

“Nissan’s announcement just days later that it would invest up to £1.12bn in its UK operations provided a further boost to the prospects for the UK’s car manufacturers and their domestic suppliers.

“And this week’s news that the EU Commission is proposing an extension to the current exemptions regarding the rules of origin is the icing on the cake. 

“Since coming into force in January 2021, companies have had to demonstrate the originating status of goods – namely cars and their components – traded with the EU, in order to be entitled to preferential treatment under the Trade and Cooperation Agreement. 

“However, there was a built-in exemption from the 10% import duty for electric car batteries which was due to expire on 31 December this year. Had this not been extended, it would have been more expensive for UK manufacturers to export to its main EU markets and would have likely raised prices for EV buyers.

“Extending this exemption until 31 December 2026 will give UK and EU manufacturers some important breathing space which should allow them to ramp up domestic production capacity.

“However, the EU has warned this is a ‘one-off’ extension and the Commission’s proposal includes a clause which renders it legally impossible for the EU-UK Partnership Council to extend this period further. The rules of origin requirements are therefore locked in from 2027 onwards.”


Note to editors

About BDO 
Accountancy and business advisory firm BDO LLP provides integrated advice and solutions to help businesses navigate a changing world. 

The organisations we work with are Britain’s economic engine –entrepreneurially-spirited, high-growth businesses that fuel the economy.  

We understand the ambitions and entrepreneurial mindset of those we work with and have the global reach, integrity and expertise to help people and businesses succeed.  

BDO LLP operates in 17 offices across the UK, employing 7,500 people offering tax, audit and assurance, and a range of advisory services. BDO LLP is the UK member firm of the BDO international network.

BDO’s global network
The BDO global network provides business advisory services in 164 countries and territories, with 111,300 people working out of 1,803 offices worldwide. It has revenues of US$12.8bn.  


Frank Shepherd
Tel: 07812 463601