Post-Brexit tariffs on EU-UK electric vehicle imports staved off for three years

Between a bloc and a hard place

The European Commission yesterday proposed a three-year delay on cross-border electric vehicle tariffs it described as a "one-off."

The rule tweak gives UK and EU automakers until January 1, 2027, before they slap on a ten percent fee when exporting the vehicles to and from the bloc. The previous deadline was less than four weeks from today.

The "rules of origin" for electric vehicles and batteries were drawn up under the Trade and Cooperation Agreement (TCA) with the United Kingdom – the deal hammered out post-Brexit that the pair described as going beyond "traditional" free trade agreements while falling short of the economic integration the UK enjoyed while in the bloc.

The edict had major electric vehicle manufacturers claiming it could shut down their operations in the UK.

Among others, Peugeot owner Stellantis told a UK government inquiry into the supply of batteries for EV manufacture [PDF] earlier this year: "If the cost of EV manufacturing in the UK becomes uncompetitive and unsustainable, operations will close."

And their counterparts across the Channel weren't best pleased either, arguing that Europe was far from a place where they could rely on a fully integrated domestic battery supply chain.

British and European carmakers currently still get a sweet zero-tariff rate while exporting to each other. Come 2027, this will only be the case if at least 45 percent of an electric vehicle's parts (by value) and 60 percent of its battery originate from either the UK or EU. If they don't hit the right ratio, the ten percent tariff kicks in when exporting the vehicles from one to the other.

A spokesperson for VDA, the German automotive industry association, told The Reg in July: "Tariffs of ten percent on [battery electric vehicles] would be a significant competitive disadvantage for European manufacturers, and also an unnecessary burden for customers who want to buy an e-vehicle. All in all this would hamper the further ramp-up of electromobility in Europe.

"If there is the political will to adjust the rules of origin, then there will be a way."

A month earlier, ACEA, the European carmaker trade body, wrote in a letter to the Commission that it also wanted TCA rules extended until the end of 2026, claiming "the payment of customs duties over that period would amount to €4.3 billion."

And it seems there is appetite for a delay beyond the German federal government, which is understood to have had an impact on the decision to hold the vote.

The high price of batteries and the fact that plenty of the components in a car are currently sourced from China and other parts of Asia has an impact on European automotive supply chains. The Commission added that it was also setting aside additional funding of up to €3 billion to boost the EU's battery manufacturing industry.

The proposal was slated to go before a full European cabinet on Wednesday and was widely expected to be waved through. ®

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