EU electric vehicle post-Brexit tariff costs might total 4.3 billion euros

The European Automobile Manufacturers' Association (ACEA) has warned that the post-Brexit rules mandating European automakers to source more electric vehicle components from the UK or the EU could cost them up to €4.3 billion ($4.7 billion) in tariffs and result in lower output.

Under the terms of the EU-UK trade deal, electric vehicles will need to have a minimum of 45% EU or UK content from 2024, with a 50-60% requirement for their battery cells and packs, or face import tariffs of 10% from the respective market. ACEA has requested a three-year postponement of the rules, citing the need to build up Europe's battery capacity.

 

The organization estimated that European manufacturers would have to pay €4.3 billion to the UK government in tariffs over the three years under the new rules, which could cut EU production by up to 480,000 units, given that Britain accounts for nearly a quarter of EU electric vehicle exports.

 

ACEA has written to the European Commission to request a review of rules of origin for batteries and to agree a three-year postponement with Britain. It expects only 10% of electric vehicles to comply with the new rules in 2024, making EU producers likely to lose out to competitors from China and other third countries. Stellantis had earlier warned that British car plants could close without a swift renegotiation of the Brexit deal.

However, the European Commission has stated that the rules are designed to support the development of a strong battery value chain in the EU, and that Brexit has altered the trading relationship with Britain. Stefan Fuehring, a European Commission official overseeing the post-Brexit EU-UK trade agreement, has stated that EU rules of origin are "fit for purpose" and that the bloc is not considering changing them.