Could Tech Offer a Solution to New EU-UK Trade Challenges?

By: Jonathan Anthony

The electric vehicle (EV) manufacturing sector was approaching a significant juncture. With the EU-UK Trade and Cooperation Agreement (TCA) initially set to enforce new rules from January 1, 2024, the industry was bracing for a pivotal shift. These regulations mandated that at least 45% of the value of EV parts must originate from the UK or EU to avoid a 10% tariff on exports between these regions, an increase from the current 40% threshold, and set to rise further to 55% by 2027.

However, in a move akin to a sudden highspeed U-turn, the UK and EU agreed to extend the trade rules on electric vehicles, pushing the initial January 1, 2024, deadline to January 1, 2026. This 11th-hour decision, made just days before the end of 2023, saves manufacturers and consumers up to £4.3 billion in additional costs and provides long-term certainty for the automotive industry, boosting electric vehicle sales between the UK and Europe.

Prime Minister Rishi Sunak highlighted the government's commitment to listening to the sector's concerns and delivering pragmatic solutions. Business and Trade Secretary Kemi Badenoch emphasised the UK's dedication to remaining a top location for automotive manufacturing and Mike Hawes, SMMT Chief Executive, lauded the decision for safeguarding the competitiveness of the EU and UK automotive industries.

Despite this welcome extension, the question remains: Can technological solutions still provide a pathway to mitigate potential rising costs in the future?
Adopting advanced supply chain management systems could still be beneficial. These systems, leveraging data analytics and AI, can enhance sourcing and logistics efficiency, ensuring cost-effectiveness and readiness for any future regulatory changes.

Blockchain technology, with its capacity for transparent and immutable record-keeping, remains a valuable tool. It can streamline tracking component origins and ensure compliance, offering advantages like expedited dispute resolution, risk minimisation, and cost savings through improved supply chain management.

As the automotive industry navigates these regulatory changes and potential future shifts, embracing technological solutions like advanced supply chain management systems and blockchain for traceability and compliance remains essential. These technologies offer pathways to comply with any new rules of origin requirements efficiently and cost-effectively.

Proactive adoption of such solutions could be pivotal in maintaining a competitive edge in the sustainable transportation market, ready for any last-minute changes that may come.

View all articles