The EU Council has greenlit an extension for UK EV manufacturers to comply with the UK-EU Trade and Cooperation Agreement.  

The extension will last until 31 December 2026 and prevent stricter rules of origin for EVs and batteries that were set to be introduced this January. 

The EU has stated that this extension will give the UK time to expand its EV battery production capacity. To support this expansion, the EU has also pledged €3m (£2.61m) under the Innovation Fund. 

These rules were originally drafted in 2020 but unforeseen events such as the Covid-19 pandemic and the Russia-Ukraine war have been credited by the EU as viable reasons for this extension. 

Executive VP for European Commission, Maroš Šefčovič, stated that the EU intends to become a leader in EV battery production.  

“By providing legal certainty on the applicable rules and unprecedented financial support to European producers of sustainable batteries, we will bolster the competitive edge of our industry,” he stated. 

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In GlobalData’s EV Thematic Research report, the research company reported that electrification has presented a unique challenge to auto manufacturers. 

Traditional, long-standing auto industry leaders appear upended by the EV transition, leaving the way for start-ups such as Tesla to disrupt the industry. 

Overcapacity across production lines and the huge cost of repurposing factories remain big hurdles for manufacturers to meet growing demand. 

GlobalData forecasts that by 2025, around 15.5 million EVs will be built, equating to a 15.1% share of total light vehicle production. 

By 2028, this will grow to 24.1 million annual units.  

This will continue to grow until EVs represent the majority of light vehicle manufacturing as petrol and diesel engines are phased out. By 2035, the UK plans to end the sale of combustible engine vehicles.