Brexit's Impact on EV Tariffs and UK Price Hikes

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【Summary】Car makers in Europe have warned the European Commission about potential post-Brexit electric vehicle (EV) tariffs that could increase the prices of EVs exported and imported between the UK and EU. If the tariffs are implemented, a 10% tariff could be placed on EV exports to the UK, costing car manufacturers 4.3 billion Euros over three years and reducing EV production on mainland Europe by nearly half a million vehicles.

FutureCar Staff Sep 25, 2023 4:23 PM PT

Brexit's Impact on EV Tariffs and UK Price Hikes

An "urgent plea" has been made to the European Commission by the European Automobile Manufacturers Association (ACEA) regarding new taxes that could increase the price of electric cars exported and imported between the UK and EU. ACEA warns that if the request is not met, a 10% tariff will be imposed on electric vehicle exports to the UK, which is the largest trading partner, starting from January next year. This could result in a loss of 4.3 billion Euros for ACEA members over three years and potentially reduce electric vehicle production in mainland Europe by almost half a million vehicles.

The tariffs are a result of the "rules of origin" regulations negotiated as part of the Brexit arrangements. These regulations state that all battery parts and certain battery raw materials must be sourced locally within the EU or UK. ACEA argues that meeting this requirement is currently "practically impossible."

Luca de Meo, ACEA President and CEO of Renault Group, expressed concern about the impact of increased consumer prices for European electric vehicles. He emphasized that at a time when market share needs to be fought for against international competition, raising prices is not the right move from a business or environmental perspective. De Meo believes that this could result in a loss of market share to global manufacturers.

ACEA and Renault advocate for support from Europe in transitioning the industry to net-zero emissions and argue against hindering this progress. ACEA is calling for a three-year extension to the phase-in period for the new regulations, stating that more time is needed to achieve the scale required to meet the rules of origin requirements.

The UK government and UK car manufacturers are optimistic about reaching a new agreement before the January 2024 deadline. However, reports suggest that there is not universal political consensus on this matter across the Channel. Thierry Breton, the EU's internal market commissioner, has stated that negotiated agreements should not be changed. The Brexit arrangements are considered politically sensitive within the European Commission, according to sources from ACEA.

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