Electric car prices set to rise if Brexit deal isn't amended
The EU-UK Trade and Cooperation Agreement requires a significant proportion of a vehicle is made in Europe if it wishes to avoid hefty tariffs
British and European car makers are calling for the EU to amend a post-Brexit deal which, at the beginning of next year, could see hefty tariffs imposed on the import and export of electric vehicles.
Under the 2020 EU-UK Trade and Cooperation Agreement, 55 per cent of a vehicle’s overall value, as well as 70 per cent and 65 per cent of the battery pack and cells have to be made in Europe to be exempt from 10 per cent tariffs.
Such a lofty target was originally set as both the UK and EU believed the appetite for electric cars would be much stronger than it has been, with manufacturers being provided with the incentive to bring battery manufacturing to Europe in order to meet demand. However, the COVID-19 pandemic and a tepid reception from consumers meant that by 2023 it was clear manufacturers were not going to meet targets, so the deadline to impose tariffs was postponed to the end of 2026/start of 2027.
But analysts believe that only a small proportion of EV batteries currently sold in the UK are made in Europe. The European Automobile Manufacturers’ Association (EAMA) estimates this figure to be around 20 per cent, driven largely by the fact that batteries are around a third cheaper to produce in China.
With this in mind and wishing to avoid potential 10 per cent EV price rises at the beginning of next year, the UK’s Society of Motor Manufacturers and Traders chief executive, Mike Hawes, told The Guardian newspaper: “Battery supply chains are still not ready to meet these stringent requirements, which were based on assumptions that have not materialised, despite major investment.
"The UK and EU must now find a pragmatic solution that avoids self-defeating tariffs on the very vehicles consumers are being urged to buy, while safeguarding investment in domestic battery capabilities.”
All of this comes as China continues its blitzkrieg of the British car market, with brands from the country now outselling competitors from Japan and South Korea. With Chinese manufacturers experiencing similar market success on the European continent, leaders are set to meet later in June at the European Council Summit, with maintaining economic competitiveness with China being one of the main items of the agenda.
Did you know you can sell your car through Auto Express? We’ll help you get a great price and find a great deal on a new car, too.
