Brexit impact on electric vehicle prices

author: FutureCar Staff    

An automotive industry body has warned that post-Brexit trade rules could lead to a £3,400 increase in the price of electric vehicles (EVs). The Society of Motor Manufacturers and Traders (SMMT) stated that this price hike would take effect from the beginning of next year unless trade rules are delayed. The UK and EU are set to implement stricter rules on the origin requirements of EV batteries as part of the post-Brexit trade agreement. If at least 45% of the value of electric cars does not originate in the UK or EU, tariffs of 10% will be imposed on exports between the two regions starting from January 1.

Manufacturers are expected to struggle to meet this threshold due to slower-than-anticipated battery production within Europe. The SMMT estimated that these tariffs could result in an average price increase of £3,400 for EU-manufactured pure battery electric vehicles purchased in the UK. Nearly half (49%) of all pure battery electric vehicles bought in the UK are from the EU. The SMMT also noted that conventional petrol and diesel vehicles would not be subject to tariffs, which could inadvertently incentivize the purchase of fossil fuel-powered vehicles.

The SMMT suggested a three-year delay in implementing the new rules of origin requirements as a pragmatic solution. This delay would allow time for European battery production to increase. The chief executive of the SMMT, Mike Hawes, emphasized the importance of the automotive industry to the UK economy and expressed concern that these trade rules could hinder the recovery and discourage the sale of electric vehicles. He called for an urgent agreement on a three-year delay to avoid negative consequences for consumers and the competitiveness of the UK and continental industries.

In response, a Government spokesperson stated that a joint UK-EU solution is needed to prevent tariffs on electric vehicles from 2024, which would not apply to petrol and diesel cars.

FutureCar Staff