Car industry pleads for delay to post-Brexit tariffs on EVs

Gets blanked again

Automobile manufacturers are pleading with the EU to delay a 10 percent tariff on electric vehicle exports into Britain.

The tariff, due to come into force on January 1, was part of the EU-UK Trade and Cooperation Agreement that allowed the UK's departure from the trading bloc.

The thinking at the time of the agreement in 2020 was that the ensuing three years would be plenty of time for the European car industry to make great leaps in electric vehicle manufacture.

Top minds in London and Brussels negotiating the deal agreed to "rules of origin" dictating that a 10 percent tariff would apply to any vehicle that was less than 45 percent made in either the EU or across the Channel.

This overconfidence has failed to materialize, however, with carmakers finding themselves still hopelessly reliant on components from China and elsewhere to meet demand.

Nowhere is this more keenly felt than battery production. After Britishvolt's collapse in January, the UK has almost none to speak of, save for Nissan's plant in Sunderland. EV battery specialist Envision is building a Gigafactory in the area, but it won't come online until 2025.

Likewise, Germany's AMG Lithium is about to start production of lithium hydroxide, which is used in batteries for electric vehicles, but has orders to fulfill stretching into 2026.

At this point it may never be possible for Europe to catch up to China where the production of rare earth materials is concerned. "We know this is an area where we rely on one single supplier – China – for 98 percent of our rare earth supply, 93 percent of our magnesium and 97 percent of our lithium – just to name a few," European Commission President Ursula von der Leyen said in March.

The result of the tariff, according to the European Automobile Manufacturers' Association (ACEA), would be a cost to EU manufacturers of €4.3 billion over the next three years and a possible reduction in vehicle production by 480,000 units.

"Driving up consumer prices of European electric vehicles, at the very time when we need to fight for market share in the face of fierce international competition, is not the right move – neither from a business nor an environmental perspective," said Luca de Meo, ACEA president and CEO of Renault Group. "We will effectively be handing a chunk of the market to global manufacturers."

He added: "Europe should be supporting its industry in the net-zero transition as other regions do – not hindering it. There is a very simple and straightforward solution: extend the current phase-in period for battery rules by three years. We urge the Commission to do the right thing."

But noises out of the European Commission aren't encouraging. Speaking to The Guardian, European Commissioner for Internal Market Thierry Breton said: "If something has been negotiated, it shouldn't be changed.

"Remember the automotive industry is not made only of the manufacturers but is made also of the hundreds of thousands of companies providing everything which is needed for a car, including the battery providers.

"It is a global supply chain. I call it the ecosystem, and I have to look at, as commissioner of industry, not at one single part of this ecosystem but all of the ecosystem.

"What has been negotiated has been negotiated and I think it's very important to stick to a treaty when it has been so difficult to do it. And when we speak about the automotive system, everyone who is part of this ecosystem I have to take care of, not one single category."

Stellantis, which owns Chrysler and Peugeot, may be one victim sacrificed on the altar of the EU's battery industry. Earlier this year, it told a UK government inquiry: "If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close."

Europe is well aware that China has it in the palm of its hand, but these actions only delay the inevitable. In the meantime, normal folk will find EVs even further out of their price range. ®

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