UK car industry to press EU for two-year delay to Brexit EV tariffs

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‘Rules of origin’ on vehicle batteries due to come into force on 1 January if deal on new delay is not reachedBusiness live – latest updatesThe UK car industry is preparing to…

‘Rules of origin’ on vehicle batteries due to come into force on 1 January if deal on new delay is not reached

The UK car industry is preparing to push for a two-year delay to Brexit tariffs on electric cars traded with the EU, after an initial European proposal suggested a shorter delay.

Tariffs are due to kick in on 1 January for the majority of electric cars traded between the EU and UK unless the two sides can come to an agreement to delay for a second time the implementation of “rules of origin” on batteries.

The Brexit deal, which was rushed through on Christmas Eve in 2020, included a clause that British and European electric cars would have to use batteries made in either the UK or the EU with local materials, or face 10% tariffs. The rules would not have existed had the UK remained in the EU.

The rules were initially meant to come into force on 1 January 2024, encouraging the industry to invest in local lithium-ion battery manufacturing rather than relying on the dominant Chinese battery industry. In 2020, the prospects seemed rosy, but three years later several prominent projects on both sides of the Channel had collapsed. The EU and UK agreed to extend the deadline in December 2023.

Other battery projects have since taken their place, but many are yet to produce at the scale required to meet European demand. Instead, carmakers are mainly reliant on imports from China, Japan and South Korea.

Carmakers in the UK and Europe are united in their calls for the introduction of the rules of origin to be delayed again. However, an agreement has yet to be reached, with the EU and UK also wrangling over whether Britain can be included in “Made in Europe” subsidies, and whether the UK should match EU tariffs on Chinese car imports. The topics are likely to form part of an EU-UK summit planned for next week.

The European Commission has shared proposals with the automotive industry to delay the start of the tariffs, although they have not yet been shared formally with the UK…

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