Mercedes-Benz boss warns 'Made in Europe' law that locks out UK would hurt EU carmaking
Ola Källenius, head of Mercedes-Benz and president of the ACEA industry group, warned in Brussels that excluding the UK from the EU's 'Made in Europe' law would be a deliberate choice to hurt carmaking across the bloc, weeks before leaders aim to agree the Industrial Accelerator Act.
Mercedes-Benz boss warns 'Made in Europe' law that locks out UK would hurt EU carmaking
Ola Källenius, who runs Mercedes-Benz and leads the European Automobile Manufacturers' Association (ACEA), has warned that shutting the UK out of the EU's 'Made in Europe' legislation would amount to a deliberate decision to damage the car industry across the bloc. Speaking in Brussels, he said such a move would weaken the industry on both sides of the Channel. His remarks came just weeks before EU political leaders hope to reach agreement on the Industrial Accelerator Act (IAA).
What the Made in Europe law would do
The act, widely known as the Made in Europe law, is designed to protect local industry by countering competition from outside the EU. It is aimed mainly at China, which now enjoys a £1bn a day trade surplus with the bloc.
- China's surplus with the EU stands at £1bn a day
- Worry about that surplus has intensified in the EU over the past three months
- The law could cause problems for close EU allies including the UK, Norway, Turkey and Switzerland
Källenius: exclusion 'does not make any sense'
At his annual briefing in Brussels, Källenius argued that leaving the UK out would deliberately worsen EU competitiveness, since the point of the IAA is to industrialise more in Europe and to build local supply chains.
"It does not make any sense … We would hurt our industry in the UK and the EU."
UK lobbying and the tariff sticking point
Andy Burnham has been lobbying hard to get the UK included in the Made in Europe legislation, but is hitting resistance, particularly from France. The UK prime minister intends to raise the matter at the UK-EU summit on 20 November, while EU leaders are aiming for political agreement on the current text by December.
Last month the EU urged the UK to follow the bloc and impose tariffs on imported Chinese vehicles, which it introduced in 2024, arguing this would strengthen the UK's case for inclusion. The UK business secretary, Jonathan Reynolds, said on a trip to India that this was not on the cards at the moment.
10% EV tariffs loom under the TCA
The ACEA is lobbying for an urgent suspension of plans to introduce 10% tariffs on UK electric vehicles imported to the EU, and on EU EVs exported to the UK. Jonathan O'Riordan, the ACEA's international trade director, said manufacturers are running out of time.
"We are getting very anxious about it. The deadline is in less than three months' time."
The tariff schedule is written into the post-Brexit Trade and Cooperation Agreement (TCA) to incentivise battery production; batteries can represent about 45% of the cost of a new car. Under the TCA, car exports on both sides are tariff-free if mainly made in Europe, but with insufficient battery production in the EU and UK, cars sent to each other's markets would be subject to a 10% tariff from next year.
The charge was originally due to come into force in 2024 but was suspended for three years to give the car industry more time. The industry says it needs a further two- or three-year suspension urgently.
EU-China trade tension in the background
On Friday, Beijing and Brussels agreed to reduce sales of hybrid electric cars by half over four years, amid a threat of trade barriers. A senior EU official told a trade policy briefing in Brussels that the time to rebalance trade by increasing EU exports was gone.
The UK prime minister intends to raise the Made in Europe issue at the UK-EU summit on 20 November, while EU leaders are aiming for political agreement on the current text by December.
