UK, EU Car Makers Call For Delay To Brexit EV Tariff

Matthew Broersma,
Linkedin
The Mercedes EQE electric sedan. Image credit: Mercedes-Benz

Electric car makers in UK and EU call for delay to upcoming export rules requiring use of batteries made in UK or EU

Electric car manufacturers in the UK and the EU have called for a delay to new Brexit trade rules that they say could cost them £3.75 billion over the next three years.

The rules could drive up prices for car buyers and and reduce British and European car makers’ ability to compete with firms from China and elsewhere, manufacturers said.

The companies’ comments concern the so-called “rules of origin” that are set to come into effect in January under the Brexit trade deal, the UK-EU Trade and Cooperation Agreement.

The rules effectively require that electric vehicles shipped across the English Channel use batteries made either in the UK or the EU.

A Mercedes-Benz electric vehicle. Image: Mercedes-Benz
A Mercedes-Benz electric vehicle. Image: Mercedes-Benz

EV tariff

If not they face a 10 percent tariff when shipped in either direction.

The EU is the biggest single market for UK car makers, while European car companies largest export market is the UK.

Renault chief executive Luca de Meo, who is also president of the European Automobile Manufacturer’s Association (ACEA), said failure to delay the tariffs would mean effectively “handing a chunk of the market to global manufacturers” including fast-growing Chinese firms.

Car makers are calling for the rules to be delayed by at least three years, with their remarks timed with this week’s meeting of the joint EU-UK Brexit specialised committees on trade.

EU industry commissioner Thierry Breton told the Guardian last week that Brexit negotiations couldn’t be reopened just to appease some sectors of the motor industry, and that there had to be a level playing field across the entire “ecosystem”.

Negotiations

ACEA has made a formal request to cut the tariff, which was agreed in 2020 when it was expected that battery production would quickly ramp up in the UK and the EU.

The rules were intended to protect European car makers from cheap imports.

The chief executive of the UK’s Society of Motor Manufacturers and Traders, Mike Hawes, told journalists last week that he thought a deal could be done, but that it could come down to the last minute.

“I can see this going down, like with Brexit, to Christmas Eve, or something like that,” he said.