The UK and the EU have reached a deal that may delay the implementation of ‘rules of origin’ and the imposition of tariffs on electric vehicles (EVs).
The European Commission has confirmed that it had agreed to a three-year postponement of the brand new trading arrangement scheduled to take effect from January.
Under the unique rules, the Society of Motor Manufacturers and Traders (SMMT) had predicted a ten% tariff on EVs traded in each directions would result in billions in costs, increased consumer prices, and diminished competitiveness for manufacturers in one another’s markets – a potential setback could significantly impede the transition to zero-emission mobility.
The UK-EU Trade and Cooperation Agreement (TCA) initially exempted electric vehicles (EVs) from rules requiring products to be substantially made in either Britain or the bloc to qualify for the EU’s zero tariff, zero quota regime, resulting from the predominant importation of EV batteries from Asia. These tariff exemptions, a part of the Brexit deal, were set to run out on January 1, 2024.
Under the more stringent rules, the one approach to avoid tariffs could be to source all battery parts and certain critical battery materials within the EU/UK, a goal deemed practically unattainable by manufacturers at present. Despite substantial investments in EV production in each the UK and EU, local battery supply needs more time to satisfy growing demand.
The SMMT, together with its EU counterparts, has consistently warned in regards to the industry’s vulnerability to stricter locally sourced content requirements if applied from 2024. It argued that a three-year extension would prevent a tariff crisis, allowing the UK and EU automotive industries to proceed selling EVs in one another’s markets without penalties.
Responding to the potential delay to post-Brexit tariffs on EVs, Paul Barker of Carwow UK, said: “If confirmed, this news will come as an enormous relief to manufacturers and motorists alike. The tip-of-year cliff-edge would have impacted the EV transition each within the UK and EU, with steep tariffs affecting automobile buyers in addition to carmakers, who rely heavily on cross-border sales. The actual fact stays that almost all EVs still depend on materials sourced from Asia, particularly batteries, so this extension means common sense has prevailed.”
This Article First Appeared At www.am-online.com
