UK car industry to ask EU to delay tariffs for two years — The Guardian
The UK automotive industry is preparing to urge the European Union to postpone for two years the introduction of 10% tariffs on electric vehicles traded between Britain and the EU. The tariffs are due to take effect on January 1 unless the parties agree to postpone for a second time the application of battery rules of origin, The Guardian reports.
Battery requirements
The post-Brexit trade agreement, concluded on the eve of Christmas 2020, stipulates that British and European electric vehicles must use batteries made in the UK or the EU from local materials. Otherwise, the vehicles will be subject to a 10% tariff.
Initially, these rules were due to take effect on January 1, 2024. Their introduction was intended to stimulate investment in local lithium-ion battery production and reduce dependence on China’s battery industry. However, several prominent battery manufacturing projects on both sides of the English Channel subsequently stalled, so in December 2023 the EU and the UK agreed to move the deadline.
Other projects have emerged since then, but many of them are not yet producing batteries at the scale needed to meet European demand. Carmakers largely depend on supplies from China, Japan and South Korea.
More current news is available on the UA.News Telegram channel Telegram.
European Commission proposals
The European Commission has presented the automotive industry with proposals to postpone the tariffs, although they have not yet formally been submitted to the UK government. According to the publication, these technical proposals effectively mean postponing the start of the rules of origin by one year.
Some options also provide for adjustments to customs procedures and the methodology for calculating the origin of goods, which could provide temporary flexibility in applying the tariffs. At the same time, part of the British industry insists that at least two years are needed for the sector to adapt and to increase output at battery gigafactories.
The European Automobile Manufacturers’ Association estimates that under these rules, the 10% tariff could apply to 82% of exports of electric vehicles and vans from the EU to the UK in 2027. According to its calculations, this could add €1.47 billion in costs per year.
The postponement of the tariffs, Britain’s possible access to “Made in Europe” subsidies, and the issue of aligning British tariffs with EU tariffs on Chinese cars may be discussed at the EU-UK summit scheduled for next week.
