Brexit trade barriers and the increased cost of Mini Cooper Electric cars

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【Summary】Brexit trade barriers could increase the cost of electric cars in the UK by £3,000 to £5,000. New tariffs and rules, which come into force in January, could add 10% to the cost of new cars and threaten Britain's automotive industry. Carmakers are urging Brussels and Westminster to renegotiate the trade deal to avoid these costs. The European Automobile Manufacturers Association warns that the strict interpretation of the Brexit deal could cost the EU €4.

FutureCar Staff Sep 26, 2023 6:22 AM PT

Brexit trade barriers and the increased cost of Mini Cooper Electric cars

British drivers may face additional costs of £3,000 to £5,000 for electric cars due to Brexit trade barriers. The introduction of new tariffs and rules could slow down manufacturing and add 10% to the cost of new cars. Carmakers are urging Brussels and Westminster to renegotiate their trade deal before January when the "rules of origin" come into effect. These rules state that electric vehicles must have a certain percentage of locally produced content, with higher requirements for battery cells and packs.

If carmakers fail to meet these requirements, they could face import tariffs of up to 10%. This would result in increased prices for entry-level electric cars such as the Mini Cooper Electric, Volkswagen ID.3, Renault Megane E-Tech, and BMW i4. Brexit was expected to create trade barriers, but carmakers are warning that it could cost the European Union €4.3 billion in tariffs and output losses over the next three years, as well as raising prices for new electric vehicles in Britain.

The European Automobile Manufacturers Association (ACEA) has expressed concerns over the strict interpretation of the Brexit deal, stating that it could have a devastating effect on carmaking and hinder Europe's transition to zero emissions. Carmakers in both Britain and the EU have called for the rules to be postponed until 2027 as their EV supply chains and battery-building plants are not yet ready to meet the demands. Failure to renegotiate the rules of origin agreement could lead to the closure of some British operations for manufacturers such as Vauxhall, Peugeot, and Fiat.

While the Business Secretary, Kemi Badenoch, hopes for a deal to be reached, the European Commission has not shown willingness to reopen the deal. The EU Trade Commissioner, Valdis Dombrovskis, supports flexibility, but the EU Internal Market Commissioner, Thierry Breton, sees the looming deadline as an opportunity to encourage EU carmakers to invest in battery plants and lithium hydroxide production. The UK imports 1.2 million vehicles from the EU annually, while it also exports a significant number of cars to the EU. However, Europe is struggling to increase its capacity to meet the growing demand for electric vehicles.

These developments come after the UK Prime Minister, Rishi Sunak, announced a delay in the ban on new petrol and diesel cars and vans until 2035, and EU ministers agreed on lower than expected Euro 7 emissions standards. Both decisions have faced criticism from environmental campaigners. Additionally, the EU is concerned about competition from Chinese EVs and has launched an investigation into potentially illegal government subsidies for Chinese car firms.