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Reading: European automakers demand EU to delay 10% tariff on EV exports under the post-Brexit trade deal
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EV-a2z > News > European automakers demand EU to delay 10% tariff on EV exports under the post-Brexit trade deal
News

European automakers demand EU to delay 10% tariff on EV exports under the post-Brexit trade deal

EV-a2zm
Last updated: 2023/09/27 at 9:49 AM
EV-a2zm Published September 25, 2023 5 Min Read
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5 Min Read
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Established automakers call for the European Union and UK Government to immediately delay the looming 10% tariffs for exported electric vehicles between the two markets, The Guardian reports.

Contents
Post-Brexit trade deal detailsPotential effectsOppositions

Some of the opposing automotive brands are France’s Renault and Germany’s BMW and Mercedes-Benz.

The EU's rules of origin, due to start next year, stipulate that 45 per cent of an electric vehicle's value must be sourced in the U.K. or elsewhere in Europe from 2024 to avoid export tariffs of 10 per cent. #Brexit #eu #uk #rules pic.twitter.com/df3PKf73fn

— ACI Magazine (@ACImagazine) May 25, 2023

Post-Brexit trade deal details

The 10% tariff for EV exports under the post-Brexit deal between the EU and UK is set to take effect from January 2024. 

However, UK- and Europe-based automakers are protesting to delay the enactment by at least three more years.

Unfortunately, European commissioner Thierry Breton previously told The Guardian that they could not re-open the Brexit deal just to adhere to the automakers’ demand. Mr. Breton further noted that he must guarantee fair competition throughout the ecosystem.

Business

We can’t alter Brexit deal to appease car industry, says European commissioner

Thierry Breton stands firm amid opposition to incoming tariffs on electric vehicle exports between EU and UKhttps://t.co/QL38MS4UOM pic.twitter.com/99ncw0H4o1

— James robertson (@jimmytheplant) September 22, 2023

In hindsight, the EU and the UK initially agreed to the EV export tariff in 2020 under the Brexit deal. They committed to follow a “rule of origin” clause that would require a 10% tariff on any EV with less than 45% content from either of the two markets. Moreover, it must have 50%-60% EU or UK content for battery cells and packs. If they fail to do so, they will be required to pay a 10% export tariff, EURACTIV indicated.

However, their respective motor industries conceded that the targets would be impossible to achieve at the given deadline as they struggled to cut their reliance on Chinese suppliers.

Potential effects

Notably, the European Automobile Manufacturer’s Association (ACEA) was the first to submit a formal request to the EU to cut the 10% tariff.

“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.”

ACEA President and Renault CEO Luca de Meo

He further indicated that the government must support the clean energy vehicle industry instead of hampering its growth.

“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.”

ACEA President and Renault CEO Luca de Meo

The 10% export tariff will significantly boost the prices of electric vehicle models in the EU and the UK. In effect, customers may be discouraged from buying EVs in these markets.

It would put Europe in a disadvantageous position in the global market against competitors from China and the US.

Oppositions

Renault Chief Luca de Meo warned that the EU’s failure to postpone the new policy would risk “handing a chunk of the market to global manufacturers,” particularly Chinese brands.

Stellantis even warned the EU to close its UK-based EV factories if they fail to negotiate the Brexit deal. For context, it calls for the ministers to retain the status quo through 2027.

EU leaders are under pressure to suspend 10% tariffs on EV exports expected to begin in Jan 2024 under the Brexit treaty.

Tories who negotiated this atrocious Treaty attack Labour trying to repair relations in a bid to making things better for UK

Sunaks sits back & does nothing pic.twitter.com/cp0esbsLtv

— ABerry (@LabourBerry) September 22, 2023

The ACEA also stated that the tariff could result in a maximum of 4.3 billion euros ($4.57 billion) lost for automakers.

Despite the opposition, the EU remains reluctant to delay the rules under the post-Brexit deal.

See Also:

  • JLR owner TATA Motors to erect its new electric vehicle batte
  • Low-income families can now purchase EVs in Germany and France
  • UK government urged to take action to help electric vehicle transition
  • UK to beat Spain in securing Tata’s EV battery factory investment
  • Electric vehicle prices may increase in UK and Europe due to EU tariffs

Failure to delay the tariff implementation would place significant pressure on either the customers or the industry. In effect, it can impede the EU’s electric vehicle industry growth and risk factory shutdowns and job losses.

Hopefully, both parties will eventually decide to delay the 10% tariff, which may happen at the upcoming prime ministers’ summit in early October.

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TAGGED: Electric Vehicle, EU, Europe, EV, UK
EV-a2zm September 27, 2023 September 27, 2023
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