Electric vehicle prices in the UK and European markets are projected to climb by over 10% when tariff exemptions under the Trade and Cooperation Agreement (TCA) included in the Brexit deal expire, as reported by Fleet News. For those unaware, the TCA recognizes that there would not be any tariffs or quotas on trade between the UK and the EU signed on December 30.
Trade and Cooperation Agreement’s qualifications for the free trade
Below are the qualifications for EVs to qualify for the exemptions under the TCA:
· maximum of 45% of a product’s value may come from sources beyond the EU
· 30% of batteries and 40% of the total weight of EVs must come from the EU or the UK through January 1, 2024
· 45% of the EV’s total weight and 50%–60% of its batteries must come from the EU or the UK from 2024 through January 1, 2027
Why should the deal be extended?
Electric vehicles were briefly exempted from regulations requiring that products be made primarily in Britain or the EU to be eligible for the EU’s zero tariff, zero quota conditions under the UK-EU Trade and Cooperation Agreement (TCA). They assert that this is since EV batteries are mainly sourced from Asia.
Now, the exemptions are being requested to be extended beginning on December 31, 2023, by the European Automobile Manufacturers’ Association (ACEA) and the Society of Motor Manufacturers (SMMT), as it is about to expire soon.
The expiration of the free trade provisions under the TCA deal indicates that a 10% tax would be applied to many electric vehicles heading between the EU and the UK if the exemption cannot be renewed.
“Rules of origin agreed in the UK-EU TCA must work for all parties and the UK and EU face challenges in ensuring there is adequate domestic battery production to meet the terms agreed. Given the unprecedented global turmoil since the TCA was signed, the EU and UK should look urgently at battery manufacturing capabilities across Europe and assess the risk of crippling tariffs on electrified vehicles being applied, affecting both sides, in little over a year at just the time we need to increase take up of these zero emission models.”
Mike Hawes, CEO of the SMMT, the UK’s automotive trade body
Automakers of electric vehicles from the EU and the UK have increased their market dominance in each region owing to the TCA’s free trade provisions. Therefore, it is not surprising that the automotive industry is asking for a longer period to take advantage of this benefit.
It would be regrettable if this initiative to encourage the adoption of electric vehicles were to be discontinued soon because it might make it even harder for the nations within its scope to switch to clean mobility.
