European Commission could recommend three-year delay to ‘rules of origin’ tariff introduction

Car manufacturers exporting their electric vehicles to Europe might not be hit with tariffs in the new year, after all. The European Commission is expected to suggest a three-year delay to the introduction of the ‘rules of origin’ (ROO) tariffs, originally due to be introduced on 1 January 2024.

All year there have been pleas from all corners of the industry to delay the levy, which is set to make EVs even more expensive. And it seems in, perhaps, a festive twist of goodwill the Commission is listening to such pleas.

It’s a move that will put a smile on the faces at Stellantis, which had flagged the potentially prohibitive costs to do business earlier in the year. It isn’t the only brand that has cited difficulties with the introduction of such a tariff at this juncture.

ROO tariffs mean any car not built with a specified percentage – currently 45 per cent – of locally sourced/manufactured components would face a 10 per cent uplift in export tariffs.

This regulation hits electric vehicle manufacturers the hardest since the majority of materials used in battery production aren’t necessarily made regionally. For example, China accounts for 78 per cent of the world’s cathode production.

Even simply making sure there’s enough gigafactories to meet the regulations is currently a challenge. The three-year delay will enable sufficient preparation time to strengthen regional supply chains. The Commission’s report is due out later today.