(qlmbusinessnews.com Thurs, 7th Dec, 2023) London, UK —
Shifting Gears: EU Commission Tables Plan for Tariff Relief on UK Electric Cars
In a significant development, the European Commission has tabled a proposal to postpone tariffs on electric vehicles (EVs) traded between the UK and the EU for a three-year period. The decision follows mounting concerns from car manufacturers on both sides of the English Channel, citing insufficient preparedness for the anticipated post-Brexit trade rule alterations slated for January. Initially conceived to protect the EU's automotive sector, the proposed 10% tariffs faced strong opposition from the industry due to projected substantial financial implications, prompting a reevaluation by the Commission. However, the suggested delay awaits endorsement from EU member states, with a crucial decision looming in an imminent meeting.
The initially envisioned EU “rules of origin,” set to be enacted from January, mandated that EVs traded between the UK and the EU must incorporate batteries produced locally to be eligible for tariff-free status. The primary objective was to shield the EU car industry from the influx of economical imports. However, numerous carmakers voiced concerns, highlighting the intricacies of meeting the specified criteria, primarily attributed to a slower-than-anticipated progress in local battery production. While the proposed deferment is poised to alleviate the burden on manufacturers, the EU Commission stressed its commitment to embedding a clause in the Brexit trade deal. This clause aims to make any further extensions beyond 2027 legally untenable, thereby reinforcing the deadline. Additionally, the Commission pledged a substantial €3 billion in funding over the upcoming three years to bolster European battery manufacturers.
The UK government, a proponent of the tariff postponement, welcomes the proposed delay as a positive development. Nevertheless, this delay casts a glaring spotlight on the UK's independent electric car production initiatives, including ambitious plans for upcoming gigafactories. These plans face uncertainties, primarily revolving around the nation's capacity for local battery production.
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