UK car industry to press EU for two-year delay to Brexit EV tariffs
The UK car industry is preparing to push for a two-year delay to Brexit tariffs on electric cars traded with the EU, following an initial European proposal suggesting a shorter delay.
Tariffs are scheduled to take effect on 1 January for most electric cars traded between the EU and UK unless both sides can agree to delay for a second time the implementation of 'rules of origin' on batteries. These rules, part of the Brexit deal agreed in December 2020, require British and European electric cars to use batteries made in either the UK or EU with local materials, or face 10% tariffs.
The rules were originally set to begin on 1 January 2024, prompting the industry to invest in local lithium-ion battery manufacturing rather than relying on Chinese suppliers. However, several prominent projects on both sides of the Channel have collapsed since 2020, when prospects seemed positive. The EU and UK extended the deadline in December 2023, but many new battery projects haven't yet reached the scale needed to meet European demand.
Industry demands more time
UK and European carmakers are united in calling for another delay to the rules of origin. The European Commission has shared proposals with the automotive industry to delay the tariffs, though these haven't been formally presented to the UK government yet. The proposals reportedly offer only a one-year delay and include technical adjustments to customs procedures and origin calculation methods.
The industry will be really clear – two years minimum or we have the same discussion next year. Giga-industrialisation is happening in the EU and UK but it is not producing at the required volume yet.
The European Automobile Manufacturers Association has warned that the tariffs pose a serious concern for Europe's automotive industry, estimating that 82% of EU electric car and van exports to the UK would face the 10% customs duty in 2027, adding costs of €1.47bn (£1.23bn) next year alone.
Negotiations continue
The UK and EU remain at odds over whether Britain can be included in 'Made in Europe' subsidies and whether the UK should match EU tariffs on Chinese car imports. These issues are expected to be discussed during an EU-UK summit planned for next week, along with the technical details of the tariff delay proposals.
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