New tariffs on electric vehicles traded between the European Union and the UK could cost EU carmakers €4.3bn over the next three years, says an industry body.
Because of Brexit, new tariffs will be imposed upon all cars made in the UK where at least 45 per cent of their components do not originate in the UK or EU. This quota is as high as 60 per cent for some components, such as the battery. A 10 per cent tax will be applied to all vehicles being sold across the English Channel not conforming to these specifications.
The tariff is due to be enforced from January, but carmakers in the UK and EU want to delay its introduction by at least three years.
The European Automobile Manufacturers’ Association (ACEA), which represents BMW, Ford and VW, said the new taxes could cost EU vehicle makers €4.3bn over the next three years, potentially reducing electric vehicle production by some 480,000 units, the equivalent output of two average-size car factories.
“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,” said Luca de Meo, ACEA president and CEO of Renault Group. “We will effectively be handing a chunk of the market to global manufacturers.”
“Europe should be supporting its industry in the net zero transition as other regions do – not hindering it,” he added. “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.”
While the industry is making efforts to bolster supply chains in Europe, it said that more time is needed to build up the scale needed to meet the new rules of origin.
The EU automobile industry generates roughly €374.6bn in tax revenue for European governments.
British carmakers actually boosted output by more than 13 per cent earlier this year as supply chain pressures eased, particularly regarding the ongoing semiconductor shortage.
In 2021, 55 per cent of cars sold by UK-based manufacturers went to member states of the EU.
A recent study from the Society of Motor Manufacturers and Traders found that the majority of UK drivers want to transition to electric vehicles but are held back by a lack of incentives and concerns over infrastructure.
