Ola Källenius, the head of Mercedes-Benz, stated that removing the UK from the EU's flagship industrial legislation would be a deliberate choice intended to hurt the car industry across the entire bloc. The act aims to protect local manufacturing by countering non-EU competition, yet Källenius argues this exclusion creates an impossible situation where manufacturers cannot compete effectively against Chinese rivals without sufficient domestic battery production. [1]
Political Context and Timeline
The warning comes just weeks before political leaders hope to reach agreement on the Industrial Accelerator Act, which seeks to resolve trade tensions. Källenius noted that the current framework is designed to counter competition from outside the EU, but the proposed removal of the UK creates a deliberate choice by leaders to harm the sector rather than solve it. [1]
Battery Supply Constraints
The specific mechanism involves tariff-free exports for cars mainly made in Europe, yet the EU and UK are unable to produce enough electric batteries to compete with China. This supply gap means that exporting vehicles to each other's markets becomes economically unfeasible without addressing the battery deficit first. [1]
Industry Impact Assessment
Källenius emphasized that locking the UK out of the legislation amounts to a deliberate choice by EU leaders to hurt the car industry. He argued that this approach does not make sense because it fails to solve the root cause of competition while simultaneously weakening the industry on both sides of the Atlantic. [1]
Next Steps and Uncertainty
While the act is intended to counter non-EU competition, there remains uncertainty about whether the EU can produce sufficient batteries to compete with Chinese manufacturers. The report suggests that without addressing the battery deficit, the entire European automotive industry faces significant risks from this proposed regulatory change. [1]
Sources and further reading
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