Europe

EU/UK Rules of Origin Incentivises CAM and Battery Producers to Localise Production Starting in 2027, automakers must meet stricter Rules of Origin RoO) under the UKEU Trade & Cooperation Agreement TCA) for EVs to qualify as ‘originatingʼ and avoid a 10% cross-border tariff. Simply assembling batteries in the UK/EU is not sufficient – key materials, such as CAM, must also meet the originating criteria. If CAM or other key components are sourced from outside the region without substantial processing, the entire battery may be classified as non-originating, triggering tariffs when an EV is exported to the UK or outside EU. For EV makers and battery suppliers, meeting the compliance before 2027 is critical, as a 10% tariff on the entire EV value, equivalent to $65 /kWh based on popular 2025 models, is far more costly than the cost difference between manufacturing batteries in Europe versus Asia. Currently, regulatory scrutiny of RoO stops at the CAM stage, which accounts for 3050% of a battery cellʼs value. Importing pCAM and processing it into CAM within the UK or EU qualifies as originating domestically. This pathway is preferred by CAM producers, as importing pCAM is far more cost-effective and avoids delays due to environmental permitting issues their pCAM partners are facing in Europe. Announcements indicate that localisation efforts are accelerating, with Chinese and Korean producers advancing CAM projects in the region. However, other producers –especially those for LFP– have said that this incentive is outweighed by the higher cost of production, and prefer instead to localize production in Morocco or Indonesia, or even stay in China.

Source: Content & analysis provided by CRU Group Distinguished Partner). For more information, visit crugroup.com.

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