Brexit impact on electric vehicle prices

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【Summary】Post-Brexit trade rules could increase the price of electric vehicles (EVs) in the UK by £3,400, warns the Society of Motor Manufacturers and Traders (SMMT). From January 1, tougher rules on origin requirements of EV batteries will be implemented, potentially resulting in a 10% tariff on exports of EU-manufactured EVs to the UK. The SMMT suggests a three-year delay to allow time for European battery production to increase.

FutureCar Staff Oct 22, 2023 9:20 AM PT

Brexit impact on electric vehicle prices

An automotive industry body has warned that electric vehicle (EV) drivers in the UK may face a £3,400 increase in car prices unless post-Brexit trade rules are delayed. The Society of Motor Manufacturers and Traders (SMMT) stated that this price hike will come into effect from the start of next year if trade rules are not postponed.

As part of the post-Brexit trade agreement, the UK and EU are set 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 expected to struggle to meet this threshold as battery production within Europe has not increased as quickly as anticipated. The SMMT estimates that these tariffs could result in an average price rise 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 suggests that a three-year delay in implementing the new rules of origin requirements would be a practical solution, allowing time for European battery production to ramp up. The chief executive of the SMMT, Mike Hawes, emphasized the importance of the UK automotive industry and its contribution to the economy.

It is crucial to find a joint UK-EU solution to prevent consumers from facing tariffs on electric vehicles from 2024, which do not apply to petrol and diesel cars, according to a Government spokesperson.