Excluding the UK from the European Union’s flagship industrial Made in Europe legislation would represent a deliberate choice by EU leaders to harm the automotive sector across the entire bloc, according to the head of Mercedes-Benz. Speaking in his capacity as the president of the European Automobile Manufacturers’ Association, Ola Källenius stated that such a decision would weaken the industry on both sides. His remarks were made just weeks before political leaders anticipate reaching an agreement on the Industrial Accelerator Act, which could potentially exclude the UK car industry from key contracts within the EU.
The legislation, designated as the Made in Europe law, is designed to safeguard local industry by countering external competition, primarily targeting China, which currently maintains a one billion pound a day trade surplus with the EU. However, the measures risk creating difficulties for close European allies, including the UK, Norway, Turkey, and Switzerland. Källenius emphasized that weakening the competitiveness of the domestic industry by excluding the UK makes no sense when the core objective of the act is to increase industrialization and build local supply chains within Europe.
Political figures have been actively lobbying for UK inclusion, though resistance persists, particularly from France. The prime minister plans to raise the matter during the UK-EU summit on November 20, hoping to secure inclusion before EU leaders reach a formal political agreement on the current text in December. Previously, the EU urged the UK to follow Brussels and impose tariffs on imported Chinese vehicles, introduced by the bloc in 2024, to better align trading sectors. However, the UK business secretary stated during a trip to India that such tariffs are not currently planned.
Simultaneously, the European Automobile Manufacturers’ Association is lobbying for an urgent suspension of planned ten percent tariffs on UK electric vehicles imported into the EU and EU electric vehicles exported to the UK. International trade director Jonathan O’Riordan expressed growing anxiety as the deadline approaches in less than three months, noting that manufacturers across the sector are concerned. The tariff schedule forms part of the post-Brexit Trade and Cooperation Agreement, structured to incentivize domestic battery production, which can account for about forty-five percent of a new car's cost.
Under the trade agreement, cross-channel car exports remain tariff-free provided they are predominantly manufactured locally. Because neither the EU nor the UK currently produces sufficient electric batteries to rival China, vehicles traded between the markets face a ten percent tariff starting next year. The tariff was initially scheduled for 2024 but received a three-year suspension, and the automotive industry now requests an additional two- or three-year extension. Meanwhile, heightened concern over China’s trade surplus resulted in a recent agreement between Beijing and Brussels to reduce hybrid electric car sales by half over four years, with officials noting that increasing traditional EU exports can no longer rebalance the trade relationship.
