EU car firms warn of £3.7bn hit if ‘no-deal’ on post-Brexit EV trade

European carmakers want a three-year delay to post-Brexit trade rules on electric cars – or tariffs will cost the industry billions.

Volkswagen ID.3 Zwickau

European car makers are calling for a three-year delay in post-Brexit trade rules around electric cars – warning of both a loss of production and a potential €4.3 billion (£3.7 billion) tariff hit.

The restrictive rules on electric vehicle trade between the EU and UK are set to come into force in six months. These require ‘rules of origin’ compliance, meaning electric car batteries must be assembled in Europe to be exempt from tariffs.

The tightened rules, due from 2024, require all battery parts (and some battery material) to be produced either in the EU or UK to qualify.

At the moment, most electric car batteries are sourced from China.

If the rules aren’t changed, cars built in Europe and imported into the UK face a 10 percent tariff. The UK is the largest export market for the EU car industry, and accounts for one in four EV exports.

Three-year delay

“Europe has not yet established a secure and reliable battery supply chain that can cater to these more restrictive rules right now,” said Sigrid de Vries, director general of EU auto trade body ACEA.  

“Time is needed to build up the required capacity… In the meantime, vehicle manufacturers must rely on battery cells or materials imported from Asia.

“We are asking the European Commission to extend the current phase-in period by three years.”

Huge cost

Renault Megane E-Tech Electric

Without a delay, ACEA says the 10 percent tariff would cost nearly €4.3 billion over the three-year period from 2024 to 2026.

“This would be detrimental not only to the EU auto industry, but also to the European economy,” added Sigrid de Vries. “As we face increasing competitive pressures from abroad, the application of these rules would have severe consequences for electric vehicle manufacturing in Europe.”

The ACEA estimates that, without a delay, tariffs could lead to a cut in EV production in the EU by up to 480,000 units. This is the equivalent output of two average-sized car factories.

Chinese threat

Chinese-made EVs already make up around a third of the UK market, despite a 10 percent customs duty.

If European car makers are forced to pay the same tariff, said de Vries, “they will clearly lose ground to third-country competition. Failure to act now will hamper our ability to remain competitive… and lead to lost market share – which will be extremely difficult to regain.”

The European Commission has not yet commented on calls to delay the post-Brexit trade rules.

ALSO READ

New BYD Dolphin EV prices to start from £25,490

UK EV choice quadruples in 5 years

100,000 classic car jobs at risk from Brexit red tape

Related Articles

Richard Aucock
Richard Aucockhttps://www.richardaucock.co.uk/
Richard is director at Motoring Research. He has been with us since 2001, and has been a motoring journalist even longer. He won the IMCO Motoring Writer of the Future Award in 1996 and the acclaimed Sir William Lyons Award in 1998. Both awards are run by the Guild of Motoring Writers and Richard is currently vice chair of the world's largest organisation for automotive media professionals. Richard is also a juror and Steering Committee director for World Car Awards and the UK juror for the AUTOBEST awards.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Mercedes-Benz has built the first fully electric Popemobile

A bespoke version of the Mercedes-Benz G580 EV, the brand new Popemobile has now been delivered to Pope Francis.

F1’s Valtteri Bottas tests new Alfa Romeo 33 Stradale supercar

The Formula One superstar took to Balocco Proving Ground to hone the exotic 33 Stradale's handling before the final sign-off.

New electric conversion kit turns classic Mazda MX-5 into an EV

Electrogenic has launched a new conversion kit to electrify the Mazda MX-5 roadster, offering more power and a modest 100kg weight increase.

New electric Ford Puma Gen-E prices start from under £30,000

Joining the Ford Puma lineup alongside hybrid petrol versions, the new electric Gen-E has a range of up to 233 miles when fully charged.