Excluding UK from 'Made in Europe' law will hurt EU car industry, Mercedes boss warns

Ola Källenius urges inclusion as Industrial Accelerator Act nears agreement and EV tariffs loom

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The head of Mercedes-Benz has warned that locking the UK out of the EU's flagship 'Made in Europe' industrial legislation would be a 'deliberate choice' to hurt carmakers across the bloc, as leaders close in on an agreement that could leave British industry on the outside.

Ola Källenius, speaking in his capacity as president of the European Automobile Manufacturers' Association (ACEA), said excluding the UK would "weaken the industry on both sides". He was speaking weeks before political leaders hope to reach agreement on the Industrial Accelerator Act (IAA), which aims to protect local industry from competition outside the EU, mainly from China, which now enjoys a £1bn a day trade surplus with the bloc.

The act 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."

Andy Burnham has been lobbying hard to get the UK included in the legislation but is hitting resistance, particularly from France. The prime minister intends to raise the issue at the UK-EU summit on 20 November, 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 the EU introduced in 2024, arguing this would help the UK's case for inclusion as it would align London more closely with Brussels. But the UK business secretary, Jonathan Reynolds, said this was not on the cards.

The ACEA is also lobbying for an urgent suspension of plans to introduce 10% tariffs on UK electric vehicles imported to the EU, and EU EVs exported to the UK, under the post-Brexit Trade and Cooperation Agreement.

"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.

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Analysis

Why This Matters

  • The outcome will determine whether UK carmakers can compete for EU industrial contracts at a time when the bloc is seeking to build local supply chains.
  • The UK-EU summit on 20 November is an early test of the two sides' promised reset in relations after Brexit.
  • The decision will also set a precedent for how the EU treats other allies, including Norway, Turkey and Switzerland, under its new protectionist industrial strategy.

Background

The Industrial Accelerator Act, known as the Made in Europe law, is the EU's response to competition from Chinese manufacturers, which the source said now enjoy a £1bn a day trade surplus with the bloc. The UK's post-Brexit trading relationship with the EU is governed by the Trade and Cooperation Agreement, which includes a scheduled introduction of 10% tariffs on electric vehicles traded between the two sides. The EU imposed its own tariffs on Chinese vehicles in 2024.

Key Perspectives

EU member states, notably France: Resisting UK inclusion, apparently concerned that the Made in Europe protections should be reserved for the bloc itself. ACEA and European carmakers: Argue the UK and EU car industries are deeply integrated and that exclusion weakens both sides at a time when they face intense Chinese competition. They also want the looming EV tariffs suspended. UK government: Wants the UK included in the legislation, but refuses to match EU tariffs on Chinese vehicles, a stance Brussels says weakens the UK's case.

What to Watch

  • The UK-EU summit on 20 November, where the prime minister will raise UK inclusion in the IAA.
  • Whether EU leaders finalise political agreement on the text by December, potentially before the UK's concerns are addressed.
  • The EV tariff deadline, now less than three months away, which ACEA wants suspended urgently.

Sources

Zotpaper

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