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Trade friction and tariff tensions between the European Union (EU) and the United Kingdom on one side, and China on the other, are intensifying over electric vehicle (EV) rules of origin regulations scheduled to take effect in January 2027.
According to major foreign media reports dated the 11th, amid rapidly shifting competitive dynamics in the European auto market, the effective date of the 2027 rules of origin regulations is expected to serve as a watershed moment determining local supply chain restructuring and tariff barriers.
Under the EU-UK Trade and Cooperation Agreement, EV rules of origin requirements will be significantly tightened starting in January 2027 to qualify for duty-free treatment within the bloc. To benefit from duty-free customs clearance, at least 55% of the value-added content of finished vehicles, 70% of battery packs, and 65% of battery cells must be sourced within the EU and UK. These figures represent a substantial increase from the previous grace period thresholds of 45% for finished vehicles, 60% for battery packs, and 50% for battery cells. Failure to meet any one of these three conditions will result in a 10% tariff being applied to trade between the two parties.
The regulations are interpreted as an effort to reduce heavy reliance on Chinese-made batteries and key materials such as cathode materials, while steering battery supply chain investments toward the EU. European automakers have requested a postponement of the regulations until 2029, citing insufficient local battery cell production capacity, but they now face mounting pressure as the deadline approaches. The European Association of Automotive Manufacturers estimated that if the 10th% tariff is implemented, it would impose an additional cost burden of approximately 1.47 billion euros (Hanwha approximately 2.2 trillion won) on the entire industry. In particular, if tariffs are applied to EVs priced around 30,000 pounds (Hanwha approximately 54 million won), prices will rise by 3,000 pounds per vehicle (Hanwha approximately 5.4 million won), inevitably leading to a contraction in sales.
Meanwhile, as the UK government considers aligning with the EU's tariff policy on Chinese EVs and the EU pushes forward its "Made in Europe" package of local sourcing criteria, backlash from China is also growing. The Chinese government has warned that it will resolutely respond to discriminatory trade measures. With strengthened rules of origin and tariff pressure on China converging, Chinese finished vehicle manufacturers are accelerating the establishment of local factories in Europe and the localization of parts to circumvent tariffs and meet rules of origin requirements, plunging the European auto market into a fierce strategic battle over supply chain restructuring.
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*This content was translated by AI.View Original
