Brexit trade impact on electric vehicle 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 this price hike will come into effect from the beginning of next year if trade rules are not postponed.

As part of the post-Brexit trade agreement, the UK and EU are planning to implement stricter rules on the origin requirements of EV batteries. Starting 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 region.

Manufacturers are expected to struggle to meet this threshold as battery production in Europe has not increased as rapidly as anticipated. The SMMT estimated that these tariffs could result in an average price increase of £3,400 for 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 pointed out that conventional petrol and diesel vehicles will not be subject to tariffs, which could unintentionally 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 practical solution that would allow European battery production to catch up. Mike Hawes, the chief executive of the SMMT, emphasized the importance of the UK automotive industry and the potential negative impact of unworkable trade rules on the recovery and growth of the sector.

The UK government 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