Brexit impact on EV prices

author: FutureCar Staff    

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 the price hike will take effect from the beginning of next year unless trade rules are postponed.

One of the post-Brexit trade agreements between the UK and the EU involves implementing stricter rules on the origin requirements of EV batteries. 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 entities starting from January 1. However, manufacturers are likely to struggle to meet this threshold as battery production in Europe has not increased as quickly as anticipated. The SMMT estimated that this could result in 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 consumers are from the EU. The SMMT noted that conventional petrol and diesel vehicles would be exempt from tariffs, which could inadvertently incentivize the purchase of fossil fuel-powered vehicles. The organization described a three-year delay in implementing the new rules as a pragmatic solution, allowing European battery production to ramp up.

Speaking before an SMMT virtual global trade conference, Mike Hawes, the chief executive of the organization, emphasized the importance of the UK automotive industry as a trading powerhouse. He stated that unnecessary, unworkable, and poorly timed rules of origin would hinder the industry's recovery and discourage the purchase of electric vehicles. Hawes proposed a three-year delay as a simple and common-sense solution that needs to be agreed upon urgently.

In response, a Government spokesperson acknowledged the need for a joint UK-EU solution to prevent consumers from facing tariffs on electric vehicles starting from 2024, while petrol and diesel cars remain unaffected.

FutureCar Staff