Remarks by Executive Vice-President Maroš Šefčovič following the College meeting on EU-UK rules of origin on electrical vehicles and batterie

Good afternoon, ladies and gentlemen. Welcome to our College read-out.

Today, the College adopted a proposal on EU-UK rules of origin on electrical vehicles and batteries. I will present it to you in a moment. 

The College has also adopted a Communication setting out several initiatives to fight hatred in Europe, as well as a package of measures concerning EU citizenship rights. Vice-President Věra Jourová and Vice-President Margaritis Schinas will present them to you right after this press conference.

Furthermore, the College discussed several proposals on animal welfare, which I will present to you tomorrow, together with Commissioner Stella Kyriakides.

Let me also mention two nominations that we adopted today.

On the one hand, the College decided to appoint Hans Das as Deputy Director-General of the Directorate-General for European Civil Protection and Humanitarian Aid Operations (DG ECHO). Mr Das is a Belgian national, currently Director ‘Emergency Management and rescEU' in DG ECHO. The decision takes effect on 1 February 2024.

On the other hand, we decided to appoint Herald Ruijters as Deputy Director-General of the Directorate-General for Transport and Mobility (DG MOVE), in charge of ‘Investment Innovative and Sustainable Transport'. Mr Ruijters, a Dutch national, is currently Director for ‘Investment, Innovative and Sustainable Transport' in DG MOVE. This decision takes effect immediately.

With that said, let us pass to the main topic of this press conference.

The College has just dealt with the EU-UK Trade and Cooperation Agreement concerning the specific area of rules of origin for electric vehicles and batteries.

After a comprehensive assessment and discussion, we have decided to propose a one-off extension – until 31 December 2026 – of those rules currently in force.

What does this mean?

Today's decision means that we skip an intermediate phase of somewhat stricter rules of origin that would have applied from 2024 until the end of 2026.

This removes the threat of tariffs on export of EU electric vehicles to the UK and vice versa on 1 January 2024.

It also means that in 2027, we will pass into the strictest level of rules of origin, as always foreseen in the Trade and Cooperation Agreement.

This is a one-off extension that will not be possible again in the near future. In fact, our proposal includes a lock-in mechanism that makes it legally impossible for the EU-UK Partnership Council to change the rules again before 2032.

Together with this, the Commission today also announces financial support to European producers of sustainable batteries.

Starting in 2024, this funding will be provided through the Innovation Fund over three years and amount to up to €3 billion. This will incentivize investment in the EU's battery manufacturing capacity, which is essential for the green transition.

Why did we have to do this?

The Trade and Cooperation Agreement was agreed in 2020.

Since then, we witnessed a number of circumstances not foreseen at the time.

This includes Russia's aggression against Ukraine and soaring energy prices, as well as increased competition from new international subsidy support schemes. This has led to a situation where the scaling-up of the European battery ecosystem has been slower than initially anticipated.

As a result, many concerns were raised by the European automotive, battery and chemical industries – who would have faced up to 10% tariffs on 1 January next year for electric vehicles whose battery originates outside the EU.

We have listened carefully to those concerns and therefore put a balanced, forward-looking proposal on the table.

It supports the competitiveness of our industry and protects jobs in the EU.

At the same time, it sends a clear signal that the EU continues to be firmly committed to developing a thriving battery sector.

This is particularly important and this is why, as part of today's proposal, we are setting aside specific financial incentives of up to €3 billion to boost the EU's battery industry.

Specifically, the Commission will set up a dedicated instrument under the Innovation Fund.

This new instrument will provide support, possibly as a fixed premium to the European manufacturers of the most sustainable batteries creating important spill-over effects on the entire value chain, including its upstream segment.

This is in line with recent Commission efforts to strengthen the industrial dimension of the European Green Deal.

The Commission also will closely monitor whether the European automotive and batteries industries are on the right track as regards the compliance with the permanent rules of origin of the TCA, and achieving a headline benchmark of supplying at least 70% of their demand for batteries through domestic sourcing.

Let me also stress that this dedicated funding instrument is yet another important measure - which the Commission has put forward in its strategic support to the battery industry.

Indeed, this comes after we have launched of the European Battery Alliance, adopted the Batteries Regulation, created and funded of the Battery Academy, and approved of two Battery Important Projects of Common European Interest.

To sum things up: This balanced proposal aims at ensuring competitiveness of the European industry, maintaining strong economic growth and creating clean jobs.

The proposal is now on the table. It is for the Council to discuss and adopt it and my team, and I stand ready to help get it across the line over the coming weeks.

I am ready now to take your questions.