Mercedes-Benz’s CEO has said that shutting the UK out of the EU’s flagship “Made in Europe” industrial law would be a “deliberate choice” by EU leaders to “hurt” the car industry across the bloc. Speaking as president of the European Automobile Manufacturers’ Association (ACEA), Ola Källenius said such a move would “weaken the industry on both sides.” His comments came just weeks before political leaders hope to agree on the Industrial Accelerator Act (IAA), which could keep the UK car industry out of key EU contracts. The act, known as the Made in Europe law, aims to protect local industry by countering competition from outside the EU. It mainly targets China, which now enjoys a £1bn-a-day trade surplus with the EU, but it could cause problems for close EU allies including the UK, Norway, Turkey and Switzerland. “It does not make any sense … We would hurt our industry in the UK and the EU. That would be a deliberate choice to worsen the competitiveness of your own [EU] industry,” Källenius said at an annual briefing in Brussels on the state of the car industry. “We are talking about how we industrialise more in Europe, how we build local supply chains, that is what the IAA is all about,” he added. 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 prime minister intends to raise it at the UK-EU summit on 20 November and is hoping it is not too late, even though 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. It argued this would help the UK’s case to be included in Made in Europe as it would align more closely with the EU on key trading sectors. But the UK business secretary, Jonathan Reynolds, said on a trip to India that this was not on the cards at the moment. The ACEA is also lobbying for an urgent suspension of plans to introduce 10% tariffs on UK electric vehicles (EVs) imported to the EU, and EU EVs exported to the UK. “We are getting very anxious about it. The deadline is in less than three months’ time. We have our feet to the fire in terms of the tariffs. All our manufacturers are worried,” said Jonathan O’Riordan, the ACEA’s international trade director. The tariff schedule is written into the post-Brexit Trade and Cooperation Agreement (TCA) as a way of incentivising the industry on both sides of the Channel to speed up the production of batteries, which can represent about 45% of the cost of a new car. Under the TCA, car exports on both sides are tariff-free if they are mainly made in Europe, but with the EU and the UK unable to produce sufficient electric batteries to compete with China, cars exported to each other’s market would be subject to a 10% tariff from next year. The tariff was originally due to come into force in 2024 but was suspended for three years to give the car industry more time. The car industry says it needs a further two- or three-year suspension urgently. Meanwhile, concern has intensified in the EU in the last three months over China’s trade surplus with the bloc, with a threat of trade barriers leading to an agreement on Friday between Beijing and Brussels to reduce sales of hybrid electric cars by half over four years. One official said the time to rebalance trade by increasing EU exports was gone. “No amount of champagne [exports] is going to revitalise the relationship [with China],” a senior EU official told a separate trade policYour briefing in Brussels.
Frequently Asked Questions
Here is a list of FAQs based on the warning from Mercedes boss regarding the UK and Made in Europe rules
1 What exactly did the Mercedes boss warn about
He warned that if the UK is left out of the EUs Made in Europe rules it will hurt the entire European car industry He believes the industry needs to work together to survive
2 What are the Made in Europe rules
These are trade rules that determine how much of a product must be made within the EU or UK to qualify for zero tariffs If a car doesnt meet these rules it faces heavy taxes when sold across borders
3 Why is the UK important to the EU car industry
The UK and EU car industries are deeply connected Parts often cross borders multiple times before a car is finished If the UK is treated as an outsider this complex supply chain breaks down
4 What happens if the UK is left out of these rules
Cars made in the UK or EU could face a 10 tariff when traded This makes cars more expensive to build and buy which could lead to job losses and lower sales
5 What is a tariff in simple terms
A tariff is a tax on goods coming into a country It makes imported products more expensive The goal is often to protect local businesses but it can also raise prices for consumers
6 Why would the EU car industry be harmed if the UK is excluded
Because the EU and UK share one big supply chain If the UK cant trade freely EU factories cant get the parts they need easily This slows down production everywhere
7 What does rules of origin mean
Rules of origin are the specific criteria used to decide where a product was made For cars it looks at where the parts came from and where the final assembly happened
8 Can a car be Made in Europe if it has parts from Asia
Yes but only up to a certain limit The rules usually require a high percentage of the cars value to come from Europe or the UK If its lower it doesnt qualify
9 What is the cumulation of rules
Cumulation allows the UK and EU to count each others materials as local Without it a UK
