BRUSSELS — The European Union and United Kingdom's car industries are urging the European Commission to modify the Brexit trade agreement. The industries are seeking a second suspension of tariffs on electric vehicle imports.

The EU-U.K. Trade and Cooperation Agreement has enforced rules of origin for tariff-free trade since 2021. Conditions for tariff-free electric vehicle sales under the trade agreement are scheduled to apply starting 1 January 2027. The 2020 agreement requires 55% of a vehicle's value to be manufactured in Europe by that date to avoid tariffs. Additionally, 70% of battery packs and 65% of battery cells must be manufactured in Europe. The European Commission previously suspended the battery origin rules for a three-year period ending in late 2024.

Jonathan O'Riordan, international trade director at ACEA, said, "The industry had forecast that 60 percent of batteries across all segments, from cars to trucks, would be made in Europe by 2027 when the tariff schedule was first suspended in 2024." O'Riordan added, "Just under 20 percent of batteries will be made in the EU by 1 January 2027." Industry estimates indicate battery production in the U.K. exceeds the E.U. level but remains below required targets. Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, said, "Battery supply chains are still not ready to meet these stringent requirements, which were based on assumptions that have not materialised despite major investment." Hawes added, "The UK and EU must now find a pragmatic solution that avoids self-defeating tariffs on the very vehicles consumers are being urged to buy, while safeguarding investment in domestic battery capabilities." O'Riordan also said, "The cost of battery manufacturing is very high, still 30 percent higher than in China." A spokesperson for the European Commission said, "Discussions on these and related topics can take place within the framework of ongoing EU-UK negotiations." The spokesperson added, "The commission is in constant contact with stakeholders in the EV sector to assess their preparedness to meet the rules of origin."