Brexit trade impact on electric vehicle prices

Home > Industry Analysis > Content

【Summary】Post-Brexit trade rules may increase the price of electric vehicles (EVs) by £3,400, warns the Society of Motor Manufacturers and Traders (SMMT). From January 1, tariffs of 10% will be imposed on exports of EVs between the UK and EU if at least 45% of their value does not originate in the UK or EU. The SMMT estimates that this could result in an average price rise of £3,400 on EU-manufactured EVs bought in the UK.

FutureCar Staff Oct 21, 2023 4:24 PM PT

Brexit trade impact on electric vehicle prices

Electric vehicle (EV) drivers could see a significant increase in car prices unless post-Brexit trade rules are postponed, according to a warning from the Society of Motor Manufacturers and Traders (SMMT), an automotive industry body. The SMMT stated that the price hike is expected to come into effect at the beginning of next year unless trade rules are delayed.

Under 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 the UK or EU.

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 these tariffs could result in an average price increase of £3,400 on EU-manufactured pure battery electric vehicles purchased in the UK.

According to the SMMT, nearly half (49%) of all pure battery electric vehicles purchased by UK buyers are from the EU. The organization also noted that conventional petrol and diesel vehicles would be exempt from tariffs, which could inadvertently encourage the purchase of fossil fuel-powered vehicles.

The SMMT proposed a three-year delay in implementing the new rules of origin requirements as a practical solution to allow for the ramp-up of European battery production.

Speaking before an SMMT virtual global trade conference, Mike Hawes, the chief executive of the organization, emphasized the importance of the UK automotive industry in delivering economic benefits, creating jobs, and driving growth. He expressed concerns that the new rules of origin could hinder the recovery and discourage the sale of electric vehicles.

The UK government acknowledged the need for a joint UK-EU solution to prevent consumers from facing tariffs on electric vehicles, which would not apply to petrol and diesel cars.