Brexit trade barriers impact Mini Cooper Electric car pricing

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【Summary】Brexit trade barriers could increase the cost of electric cars in the UK by up to £3,000, as new tariffs and rules slow manufacturing. Car manufacturers are calling for urgent renegotiation of the trade deal before January, when new "rules of origin" come into force, potentially adding 10% to the cost of new cars and threatening the automotive industry. The European Automobile Manufacturers Association warns that the strict interpretation of the Brexit deal could cost the EU €4.

FutureCar Staff Sep 25, 2023 9:15 AM PT

Brexit trade barriers impact Mini Cooper Electric car pricing

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 the manufacturing process and increase the price of new cars by up to 10 percent. Carmakers are urging Brussels and Westminster to renegotiate the trade deal before January, when the "rules of origin" come into effect. These rules require electric vehicles to have a certain percentage of locally produced content, which could result in higher costs for car manufacturers and potential import tariffs.

If carmakers fail to meet the requirements, they could face import tariffs of up to 10 percent. This would mean an additional cost of at least £3,000 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 for the UK, but it is now predicted that it could cost the European Union €4.3 billion (£3.75 billion) in tariffs and output losses over the next three years. This could also lead to increased prices for electric vehicles in Britain.

The European Automobile Manufacturers Association (ACEA) has warned that a strict interpretation of the Brexit deal could have a devastating effect on the carmaking industry. ACEA President and Renault CEO, Luca de Meo, stated that increasing consumer prices for European electric vehicles at a time when market share needs to be protected against international competition is not the right approach. Car manufacturers 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.

Vauxhall, Peugeot, and Fiat manufacturer Stellantis have even suggested that they may be forced to close some of their British operations if the rules of origin agreement is not renegotiated. While the UK's Business Secretary hopes for a deal, the European Commission has shown reluctance to reopen the agreement. The UK imports 1.2 million vehicles from the EU annually, while also being a significant exporter of cars to the EU. However, Europe is facing challenges in ramping up its capacity to meet the growing demand for electric vehicles.

Meanwhile, the EU is concerned about competition from Chinese electric vehicles and has launched an investigation into potential illegal government subsidies for Chinese car firms. The EU Trade Commissioner, Valdis Dombrovskis, supports flexibility in the rules, but the EU Internal Market Commissioner, Thierry Breton, sees the approaching deadline as an opportunity to encourage EU carmakers to invest in battery plants and lithium hydroxide production.

These developments come after the UK Prime Minister 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. Environmental campaigners have criticized these moves. However, the EU is primarily focused on addressing the competition from Chinese electric vehicles and potential market distortion caused by government subsidies.