Brexit impact on electric vehicle prices

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【Summary】Brexit trade rules may increase electric vehicle (EV) prices by £3,400 unless delayed, warns the Society of Motor Manufacturers and Traders (SMMT). The UK and EU are set to impose stricter rules on the origin requirements of EV batteries, with tariffs of 10% on exports between the two if at least 45% of their value does not originate in the UK or EU. As battery production in Europe has not increased as quickly as expected, manufacturers may struggle to meet the threshold.

FutureCar Staff Oct 20, 2023 11:18 PM PT

Brexit impact on electric vehicle prices

An automotive industry body has warned that the price tags of electric vehicles (EVs) could increase by £3,400 unless post-Brexit trade rules are delayed. The Society of Motor Manufacturers and Traders (SMMT) stated that the price hike will take effect from the beginning of next year if trade rules are not postponed.

As a result of a post-Brexit trade agreement, the UK and EU are planning to implement stricter rules on the origin requirements of EV batteries. From January 1, tariffs of 10% will be imposed on exports of electric cars between the UK and EU if at least 45% of their value does not originate in either the UK or EU.

Manufacturers are likely to struggle to meet this threshold as battery production within Europe has not increased as quickly as anticipated. The SMMT estimated that these tariffs could lead to an average price increase of £3,400 on EU-manufactured pure battery electric vehicles purchased in the UK.

Currently, nearly half (49%) of all pure battery electric vehicles bought by UK buyers are from the EU. The SMMT highlighted that conventional petrol and diesel vehicles will not be subject to tariffs, which could inadvertently encourage the purchase of fossil fuel-powered vehicles.

The SMMT proposed a three-year delay in implementing the new rules of origin requirements, describing it as "a pragmatic solution" that would allow 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 concerns that these rules would hinder the recovery and discourage the sale of EVs.

The UK government stated the need for a joint UK-EU solution to avoid imposing tariffs on electric vehicles from 2024, tariffs that would not apply to petrol and diesel cars.