An immediate deal between the EU and UK to avoid damaging Brexit tariffs on electrified vehicles has been requested by Society of Motor Manufacturers and Traders (SMMT).
The plea is to delay the implementation of tougher new Rules of Origin (ROO) requirements on batteries which could render EU and UK made electrified vehicles uncompetitive in each others’ markets.
Due to come into force on 1 January 2024, electrified vehicles that do not meet the new thresholds will be subject to a 10% tariff when traded across the Channel, resulting in a combined cost of £4.3 billion.
For the consumer, this could mean an average price hike of £3,400 on EU-manufactured battery electric vehicles (BEVs) bought by British buyers, and a £3,600 rise on UK-made BEVs sold in Europe.
Therefore current vehicle growth in Europe is now threatened as rules that were agreed before the pandemic, war in Ukraine and supply shortages come into force in just 75 days’ time.
With almost half (49.1%) of all new BEVs registered in the UK in the first half of the year coming from the EU, any cost increase would act as a barrier to uptake.
According to the SMMT, a three-year delay to the introduction of the stricter rules of origin is a pragmatic solution. It would provide the necessary time for EU and UK gigafactories to come on stream as well as helping the development of local battery parts and critical mineral supply chains.
Mike Hawes, Chief Executive of the SMMT, said: “UK Automotive is a trading powerhouse delivering billions to the British economy, exporting vehicles and parts around the world, creating high value jobs and driving growth nationwide. Our manufacturers have shown incredible resilience amid multiple challenges in recent years, but unnecessary, unworkable and ill-timed rules of origin will only serve to set back the recovery and disincentivise the very vehicles we want to sell.
“Not only would consumers be out of pocket, but the industrial competitiveness of the UK and continental industries would be undermined. A three-year delay is a simple, common-sense solution which must be agreed urgently.”