The business currently imports batteries from China’s CATL, something that makes it harder for the company to comply with the higher threshold requirements. Other carmakers are less exposed to the rules. Nissan builds batteries in the UK with Envision, while BMW’s electric Mini uses imported batteries from Germany.
As the European EV batteries sector is not sufficiently developed, the parties have agreed to extend the current rules until 2027. In 2022, the United Kingdom (UK) was the EU's second biggest export destination for cars, accounting for 17 % of total exports, halfway between the United States (23 %) and China (15 %).
The rationale behind the rules was to incentivise investment in domestic battery manufacturing capacity. However, the rules were agreed prior to the emergence of major social and economic developments that had a strong disruptive effect on the EU and UK supply chains and automotive sectors.
The majority of battery demand for EVs today can be met with domestic or regional production in China, Europe and the United States. However, the share of imports remains relatively large in Europe and the United States, meeting more than 20% and more than 30% of EV battery demand, respectively.
The United Kingdom is not an exception: in May 2020, two UK start-ups, AMTE Power and Britishvolt, announced plans to build the first large-scale battery factory to ensure a supply of cells for domestic carmakers. Until now, European and UK carmakers have been buying batteries from South Korea and China.
These levels increase to 55 per cent for vehicles and 65 per cent for batteries in 2027. The concession was put in place to allow fledgling battery industries to develop on both sides of the Channel. How do the rules affect UK carmakers?